The Importance of Being Able to Think for Yourself
“A little knowledge can go a long way.”
“If something sounds too good to be true, it probably is.”
Sentiments as true today as ever before. I’m sure you’ve seen all the commercials celebrating the 100th year anniversary of one of the great, iconic American brands, Chevy. It’s amazing to think about what General Motors (NYSE: GM), Ford (NYSE: F) and Chrysler stood for back then as symbols of American excellence. Today, they’re fighting an uphill battle for survival. If you want to get technical about it, GM and Chrysler have already died and been resurrected.
I’d venture to say that GM’s size and market share back in the mid-1900s helped set it up for failure. GM more or less dictated market conditions for the others. I say helped because there are a number of different reasons why Chrysler, GM and the ill-conceived Delphi failed. And I’m not setting out here to debate why or what was the most important and whose fault it was. Blame management; blame the UAW; blame the United States and our rising costs of health care. Heck, blame Walter Philip Reuther. Don’t know who he is? Look him up; interesting character to say the least. Ultimately GM along with other companies like Bethlehem Steel failed because of unshakable legacy costs (pensions for example along with other promises made for many years in the future). Forget how the got there. Legacy costs are what killed them.
Pensions were a benefit; something that attracted workers to the workforce. Wages were negotiable, but pensions, healthcare and the like were the benefits that really got folks interested. If you put in your time, unions and management together were basically saying that you were guaranteed a decent retirement and they would foot the bill. And that sounds great, it really does. In fact it sounds too great. No company can sit there and tell you what the world is going to be like in 30, 40 or 50 years. It simply isn’t possible. But that’s what pensions are. They’re predictions of what the world is going to be like many, many years down the road. For this reason alone they’re doomed for complete and utter failure.
Reuther was a socialist who appealed to the working man. He fought hard for them, demanding more and more for workers in order to guarantee the spread of the American Dream, apparently without any thought as to the actual potential of a “rainy day” or the concept of supply and demand for that matter. Competitive forces come together to change market conditions in the blink of an eye, but remember that competition is a good thing. It offers the best opportunities for progress and advancement and I believe that our American economy continues to provide the best platform for competition to take place.
There’s a lot of blame to throw around these days. People are hurting, unemployment is brutal and housing sucks. The funny thing is that it sure didn’t seem like anyone griping when everything was humming along several years ago. But things were just as bad then; we were just on a delay. We were waiting for the bottom to fall out. Some people knew it, most had no clue at all. The bottom line here is you need to be able to think for yourself. Don’t count on someone to do it for you. It’s amazing to think in regard to finance what seems like common sense to many is not to others. I don’t need someone to tell me that tapping the equity in my home so I can keep up with the Joneses is a bad idea; I know it is. But a lot of people did it. And the banks let them. So who’s to blame? Well of course they’re both to blame.
The banks took that risk knowing good and well that it might not pay off. And what’s worse is that many of them blindly sold consumers on the prospect that they could in fact afford it. Read Lowenstein’s “The End of Wall Street” and tell me you don’t want to punch Angelo Mozillo square in the nose. But consumers were guilty too of borrowing more than they could afford. They were (and many still are) either poorly educated in the ways of finance or lacking any self-control at all (or maybe even the deadly combination of both). And our government failed us without question as Fannie and Freddie continued to subsidize the securitization of all of these bogus loans.
Whatever it is you do, whatever it is that you want, don’t rely on someone else to get it for you. A little knowledge can go a long, long way; especially in today’s world. Don’t count on the promises of a government or an employer for that matter. Those are promises made based on predictions of the future, and we simply cannot know what the future holds with any kind of certainty. Social security and corporate/government pensions are perfect examples. Live within your means. Save your own money. Learn how to manage your own money and take control of your own future. I’m not saying it’s easy and I’m not saying the system is perfect. But for cripe’s sake people, being Americans does not entitle us to success and a great life. It gives us the opportunity to pursue that, or whatever else it is we want. But don’t just sit there and think that it’s going to be handed to you. Because if anything, I would argue we are moving more and more towards a society where that is becoming less and less the case simply because it’s now quite obvious that we can’t afford that type of behavior.
I’ve written before of my feelings toward the Occupy Wall Street movement. Nothing new there that I think it lacks any kind of a clear message. But I read the other day about this Occupy Xmas movement, and thought: (Well first I thought, “Great, another occupy thing.”) “Wait a minute, this is a message that has a point.” Here’s what I read that caught my eye:
“Consumer overconsumption has gotten us into this mess and the economic crisis to begin with. The work we’re trying to do is to get people to care about the country, to get us focused on how we can redirect our resources,” Chicago Tribute quotes spokeswoman for OWS, Dana Balitki.”
Holy crap! Lemme understand correctly. You’re assigning blame to the consumer here, right? Because that’s what it sounds like. Anyone who thinks that consumer overconsumption is not a problem of epic proportions in our country today isn’t thinking rationally in my book. Now more than ever before do we have so many things we can buy and so many ways we can buy them. From iPads and iPhones to cars, houses, boats, and every other gadget and toy imaginable. It amazes me to hear people gripe about their finances to then diddle around on an iPhone or some other expensive toy that is not a need. I don’t need to waste your time with the examples. They go on and on and on and we see them every day and everywhere. We’re working very hard in my house to teach our girls the difference between what they want and what they need. And they’re getting it too.
I’ll close simply with what I said before: Live within your means. Save your own money. Learn how to manage your own money and take control of your own future. It’s the best chance you’ve got and the U.S. is the best country in which to do it.