No Time To Think

The average American has no time to think — thank God.

It is the good ol’ summertime. Any other time of the year, we’d be too busy, too. But that is the nice thing about the long, slow days that follow the summer solstice in Europe; you can take time to think about things. Especially once you begin to think like a European and begin to appreciate long vacations, as well as long days.

So far, Americans have fought the war of the worlds by aiming their guns at their own heads. That is, they’ve met the challenge of competition from the East in two suicidal ways: they have worked more hours per household (they now work more than any group on earth), and they have gone into debt (they now owe more money than any other people too). This has allowed them to keep spending at a furious rate, which looks to a blind economist like "growth."

There are two kinds of growth, says Stephen Roach. There is good growth and bad growth. The bad growth is what you get when people spend money they don’t have, and aren’t likely to ever get. It is a growth in consumption without a matching growth in production; it is a dead end.

Working long hours is seen as a virtue in America. We think it is a vestige of an earlier era…a virtue that used to pay. We’re not sure it does anymore, because the United States is no longer a high-savings, high-investment economy.

Savings and capital investment add value; without them, people just race along, either spending their own money or helping other people spend.

In Europe, by contrast, rigid labor rules and high wages make it expensive to hire new employees. Businesses invest money to try to develop new equipment so they won’t have to hire people. The result is high real wages, high leisure time, and high unemployment, too. For good or for bad, people have free time to think about things.

Although he is beginning to like European-style vacations, your columnist is a typical American. Even after 35 years of employment he still works 12-hour days. Europeans do not look at him with admiration, but with contempt. They think there must be something wrong with him; he can’t seem to get his work done in a normal workday. They suspect that he is stupid and wonder if he is unable to appreciate the value of leisure. Even in the labor market, price and value are different. People know the price of each hour they work; what they don’t know is the value of the hour they don’t.

What we’re thinking about this morning is the difference between value and price. Those who are too busy to think about it, forget that there is a difference. The price is something you can know in an instant. Prices are urgent; value is important. If you don’t have time to think, you can take the price as though it were an indication of value. That is what people-in-a-hurry do. They rush into a store to buy something. They are likely to choose something because it is cheap, which represents the best value-for-money…or because it is expensive, which they take as an indication of greater value. The person who always wants the best, generally buys the most expensive; he hasn’t the time to figure out what real quality is.

Last week, we went into the big department store in Paris, Galeries Lafayette, to buy a pearl necklace for Sophia’s birthday. We saw some necklaces that looked perfectly acceptable. The pearls were white and round; we saw no flaw. But when we looked at the price tag, we realized that these were not real pearls. The necklace was too cheap, only 49 euros. We put the question to the clerk and were directed to a different section of the store where the real jewelry was sold. There, we found another pearl necklace for ten times as much money. For all we could tell, it was no more "real" than the first one. But we were content with it because it cost more money.

But price is an unreliable indicator of quality. Today’s half a million dollar California house is not nearly the grand palace the price tag indicates. In fact, it is the same dump that you could have bought five years ago for half the money. Then, it provided barely-decent shelter at a barely-reasonable price. Now, it costs the average household the equivalent of ten times its annual earnings. And what do you get for so much money? Granite countertops and an eat-in kitchen! The typical California house is a blank, charmless box stuck in a semi-habitable desert along with thousands of others just like it. There are no gardens to speak of. There are no architectural refinements. There is nothing beautiful about the place…in the whole shebang, there is no graceful place for dinner. Nor is the barrack even particularly useful; every time you want a drink you’ve got to get in your car and drive 20 minutes.

Is it worth it? Who has time to think about it?

It takes a bit of quiet thought and reflection to determine the real value of something. But Americans are too busy borrowing and spending to ask questions. They’ve got mortgages to pay. Things to buy. Places to go. Their vacations are so short that even then they have no time to wonder about things. And the brevity of their vacations raises no question marks in their minds.

Is it really worth it to work so much?

How come, after all this work, we still owe so much money? What do we have to show for it? How is it possible that we live in the world’s most dynamic economy…yet we make so little financial progress? What is wrong with our economy? Why is General Motors laying people off, while foreign carmakers show record profits? If we have such a healthy economy, why are so many leading companies having such a hard time? When we insist that China make its money more valuable, aren’t we really trying to make our own money less valuable? Is it really worth it to borrow more money to buy gadgets and gizmos; don’t we have enough stuff already? What’s the point of being a citizen of the world’s only empire if it means we have to work harder than anyone…and go further into debt, too?

Even in the summer vacation season, Americans never get around to asking the questions. Thank God. When they do, the jig will be up.

• The euro seems to be making its move — finally. It is back at $1.21, after falling to $1.19. Yesterday, the European Central Bank said it would not cut its prime rate, currently at a very low 2%.

• People come to have the ideas and beliefs they need when they need them. We keep saying so…hoping that we will eventually figure out what we mean by it. Senator Charles Schumer is now one of the backers of a bill to impose tariffs against China. He used to be a free trade man. Now "free" has given way to "fair." He wants to force China to "play fair." In his mind, that means forcing the Chinese to revalue their currency so that America’s goods will be cheaper and China’s good will be more expensive.

• Gold is still at $426 — a dollar over our buying target. Buy anyway.

• "I don’t know if this is the best situation for your mother," began a conversation yesterday. It must be a common discussion.

"It’s just too bad we’re so…well…it’s too bad we move around so much. It’s too bad we’re so busy. Your mother is reaching the stage of her life where she needs more attention. I’m afraid we just can’t give it to her. She needs someone to make sure she’s eating enough…and going to the doctor. You know how she is. She never complains. And then when she does finally go to the doctor she doesn’t want to admit that anything’s wrong. So, you have to pay more attention to her. "

Your columnist’s mother has been a part of the family for the last 10 years. She enjoyed living in Europe with us. And she liked being around the children. But now, things seem to be changing. She can’t get around as well as she used to. She used to take advantage of the art museums and cafs; but now she feels too weak to go out. And she’s afraid she won’t be able, physically, to make annual trips back to the United States to see the rest of the family.

"She told me she thought she should go back to the States now…because she’s afraid that if she waits much longer she won’t be able to go back at all."


Bill Bonner [send him mail] is the author, with Addison Wiggin, of Financial Reckoning Day: Surviving the Soft Depression of The 21st Century.

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