MEGAN MCARDLE ON CHRISTMAS AND THE ECONOMY: “The only good thing that I can possibly think of about this financial crisis is that it may break the rat race of constantly ratcheting consumption, which has surrounded most Americans with nice things that don’t really make them happy. There’s absolutely nothing wrong with buying whatever you want, when you have the money to afford it. But when you start thinking that you need toys and television sets to have a happy life, we’re all in trouble.”
She’s right, if overoptimistic. But what’s really nice about today’s world is that lots of things that were luxuries a few years ago are cheap — flat-screen HDTVs for under $500, for example. It’s possible to live quite well, even luxuriously in many respects, by the standards of previous decades on not all that much money, if you don’t insist on having the biggest, latest and trendiest. (One of her commenters notes this too).
Of course, for us academics, recessions can be good times. I know quite a few faculty types who’ve acquired boats, lake houses, cars, etc. at bargain prices from stockbrokers and other commision- and bonus-dependent folks when times turned bad. As an academic, you don’t make much (if any) more when times are flush, but your salary is still there when times are not-so-flush, and that supports buying opportunities. People who habitually save money and have cash in the bank are in a similar position. People who borrow against their 401K plans to buy their kids robot dinosaurs are not. (Not that there’s anything wrong with robot dinosaurs — I would have liked one when I was a kid, I suspect — it’s just dumb to be buying them when you can’t afford them).
Will this recession encourage people to save more and borrow less? Possibly. I think it would be a good thing if it did, anyway, though paradoxically recovery seems to depending on getting people to spend instead of save. Meanwhile, the Insta-Daughter is buying presents for people with money she’s saved, which has the added benefit of making her appreciate what the people who buy presents for her are doing.