Posted by
Andrew Allen on Thursday, July 17, 2008 12:00:00 AM
My grandfather, were he still alive, would be absolutely steaming at the predicament that both borrowers and lenders have gotten themselves into over the last couple of years, and he would be even more furious at the thought of the federal government working to bail both parties out of it. My grandfather was born in 1919 and his formative years were spent during the Great Depression. I grew up on his stories of Oklahoma farm life in those dark days and he passed on to me, my siblings, and my cousins a sense of fiscal conservatism that was directly related to his experiences during times when cash money was extremely rare. The principles that he taught us were simple, timeless, and essential to economic success when times are tough. They are as follows:
1. Work comes first: My grandfather had a couple of hobbies. He bowled, he hunted, and he loved to fish, but he did none of these until his work was finished. My grandfather worked for himself, and as a child I worked for him each summer. When he planned a fishing trip he always got us up early and we did the same chores as every other day before we left to enjoy ourselves. Fun was a priority, but work came first.
2. Never borrow money for a luxury item. My grandfather hated debt, and he stayed out of it as much as possible. One thing he would never do is borrow money for something he did not need. As I said before he was an avid fisherman and he always had a boat. As a young man with a family, and little money, this meant he had to build his own boat. Later when he became more financially secure he had several nice bass boats, but he always paid for them in cash. He felt it was senseless and irresponsible to borrow money for something that was not a neccessity.
3. Do everything with your family in mind. My grandfather was very generous with us, and our parents. Every decision he and my grandmother made was prioritized by their family's needs, whether it was buying a vehicle, shopping for items, or borrowing money. My grandfather was a risk taker in many ways, but he never took risks that might in some way harm his family.
There are a variety of other principles I could list that he taught us as we grew up, but these are enough to emphasize my point. The point of this blog is not my grandfather's advice, it is the fact that I had a grandfather who took the time to teach me what he had learned through his life experiences, with the direct purpose of preparing me to deal with the issues that I would face during my lifetime. This passing of knowledge from one generation to another is called cultural transmission. By this transfer of knowledge cultures develop their character and either thrive,survive, or decline.
The current mortgage crisis is just one area where our citizenry is exhibiting the effects of a lack of cultural transmission. My generation is characterized by broken families and a lack of guiding principles taught to us from the generation ahead of us which has been the great proponent of cultural relativism. They exampled for us a distinct self-centeredness and taught us that the American Dream is getting what you can when your young and living it up in the present moment, because Uncle Sam will take care of you when your old. My generation has waited for nothing, and when we entered the work force we immediately went into debt, not just for homes and cars, but for boats, trips, wave runners, motorcycles,etc. Not only this, but we had to have the nicest of everything. As long as we could make payments, we figured we could afford anything, and when banks began to offer us home loans of 110% of the value of our property, we jumped at it and used the equity we had in our house to get something else we thought we needed. Now we have four maxed out credit cards, two leased cars we're terribly upside down on, and we're blaming the banks for problems because they loaned us the money. My grandpa would have had a fit.
There's an answer to this problem, a solution, a preventative measure all rolled up into one. Listen! Listen to the people who have gone before us and been successful. There is an abundance of wasted wisdom all around us, especially in those relics from the World War II and Korea generation, who we think are too old to possibly have any relevent advice on today's economy. Our culture has replaced family with self satisfaction, and we no longer have a populace who is receiving vital knowledge through cultural transmission and the mortgage crisis is just one symptom of this. For most people in trouble, their mortgage isn't the main problem, it's their lifelong habit of fiscal irresponibility that has come from trial and error, because they had no one to teach them, or because they chose not to listen, and a bailout will only serve to perpetuate their ignorance.