Our changing Home Economy

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Submitted by adam ricketson on Fri, 2009-04-03 16:57.

Some commentators have asserted that our current economic troubles will change the way that Americans think about money and wealth -- similar to how the Great Depression and WWII impacted that generation known for frugality. Of course, this may just be wishful thinking from people who have been advocating these changes and feel vindicated by the public attention given to personal practices such as frivolous consumption, unproductive debt, and general lack of concern for economic stability.

Anyway, here are some stories that may reflect changing attitudes:

  1. Economist's special report on entrepreneurship. Right now, a lot of people don't know how to apply their efforts effectively. Somebody's got to figure it out!
  2. Quicken has a profile of The Old School Frugalists: These stories make you appreciate how much wealth regular Americans have, and how much good we could accomplish if we wanted to.
  3. An entrepreneurial answer to the paradox of thrift: make investments in your own life. Rather than just saving money and relying on others to find good investments.
  4. International development is getting more attention as a target of personal charity, and there is an explosion of projects that focus on small scale (family or village) infrastructure deployment with immediate benefits for impoverished individuals. For instance, consider Microcredit, attempts to develop technologies suited for developing countries, or projects such as the Solar Electric Light Fund.
  5. Revival of the "victory garden". While Industrial-farming proponents argue that there isn't enough land for organic farming, many Americans are converting decorative lawns into productive gardens. If gardening replaces other hobbies, Americans can reap the benefits of organic foods while saving some money, getting some exercise and sunlight, having increased contact with neighbors (both in sowing and harvesting), and getting a liberal arts education*.
* gardening stimulates interest in plant physiology and ecology, while providing knowledge about agriculture that contributes to understanding economic activities and historical events.

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RE: Changes

#7102 On Mon, 2009 04 06 06:20 ka1igu1a said,

I would say the major shifts involve more around a surge in bartering than anything else. That's probably, to be quite honest, where the real uptick in any new entrepreneurial activity is actually taking place.

Old School Frugalists are outliers...

Is there any evidence that more Americans, in any significant statistical uptick, are actually growing their own gardens, other than speculation that they might down the road?

Nonetheless, there probably will be a shift in thinking about accumulating consumer debt based on paper wealth going forward; however, the downward levels in consumer debt will be offset by the markedly increased levels of government debt, and sooner than later, the increased tax burden. So increased savings is not a given. In a stagflated scenario, you will see more and more talk about the barter and black market economies, the "off-the-books" economy. A sticky unemployment rate will result in more frequent "shock" stories of violence and social unrest. The "pitchforks" aren't really going to come out, but a sensationalizing media can make it seem like we are on the verge. I give good odds that an anti-inflation, anti-tax, anti-spending message is going to emerge from the GOP and gain some real traction(unfortunately, it'll probably carry some anti-immigration baggage along with it).

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stats on gardening

#7104 On Mon, 2009 04 06 19:14 adam ricketson said,

The gardening supply companies claim that their sales are growing quickly.

Aside from that, it's just media buzz.

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frugalists

#7105 On Mon, 2009 04 06 19:20 adam ricketson said,

The people profiled in that article clearly represented the best-case scenarios for the "old school frugalist" strategy. They probably never faced any major financial burdens (disease, disability), and they probably received above average returns on their investments.

Still, I'm convinced that large numbers of Americans can (or could have) retired with equally large fortunes if they had embraced frugality. We clearly squandered massive amounts of wealth over the past two or three decades -- I say this base on my own observations and knowledge of how quickly some frivolous industries grew over that period. I don't know if we're going to have the same opportunities going forward -- I think that the era of cheap credit and cheap imports is over.

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