From the "I need' to the "I gotta have"

Since the Great Depression Americans’ relationship with money has evolved. The nation has  “progressed” from rugged individualism (to each according to his abilities) toward egalitarianism (to each according to his need).

The ideal has slowly morphed from independence from governmental largesse to dependence on social programs.  Some advocate a more interdependent relationship between the citizen and the State.

A recent study of Americans’ retirement plans revealed that 48% of Americans have less of $ 10,000 put away.  As a result, most are dependent on Social Security benefits for their old age needs. Many struggle financially at a time when they should be enjoying the “golden years,” forcing many to move to low cost States or to cheap foreign domiciles.

Most Americans live from paycheck to paycheck. They are burdened by heavy mortgages or rents, car loans, insurance premiums, ballooning credit card balances, and the “gotta haves” of modern day living.  This continual juggling between money inflows and outflows makes it for a precarious existence.

What ever happened to the values of post Great Depression to be thrifty, self-reliant, and prudent? How did we get hooked on entitlements? How did we morph into an immediate gratification society? And most importantly, where do we go next?

I suggest that we re-visit the wise principles of our predecessors:

·      You do not buy things if  you don’t have the money to pay for them.

·      You should set aside 10-15% of your net income for future needs and contingencies.

·      You should not charge anything to your credit card if you couldn’t pay off the balance when the monthly bill arrives.

·      You should clearly separate those things you need from those things it would be nice to have.

·      You should stay away from getting personal loans, especially payday loans that charge usury interest.

·      Perhaps the most important, you should live within your means.

Frugal people don’t go and spend thousands of dollars for a big flat TV, if they do not have the money. They are content with one car, if that is all they can afford. Smart people do not run out and spend a thousand dollars or more on a fancy cellular phone just to use it for social media nor do they sign up for contracts costing hundred of dollars for so-called convenience.

Smart people resist the urge to:

·      Buy an R.V., timeshare, second home or boat because everyone else is doing it. These purchases will require money to maintain that you might not be able to afford. Depreciation wipes out much of the value immediately after the purchase.

·      Do not charge dinner outings, travel and vacation to their credit card unless they have the ability to pay off the credit card balance at the end of the billing cycle.

·      Do not buy a home if the mortgage payments will eat up more than 1/3 of their take home pay. Home ownership costs more than just the mortgage: property taxes, insurance, maintenance and repairs, just to name a few.

·      Stop keeping up with Joneses. The Joneses might have more money that them or they might be more foolish. Either way not a good decision.

Stop listening to false prophets:

·      California House Representative Maxine Waters, for example, pushed for easier mortgage loans in the late 1990’s saying that “even poor people” should be able to buy a home.” We all know what happened when the economy went south in 2007-2008. Poor people and illegal (although ineligible) aliens were the first to lose their homes.

·      Madison Avenue bombards us with a variety of come-ons, some for non-essential and luxury items. Do not get trapped in the cycle of materialism. They will try to make you feel that if you don’t get on the bandwagon, you might fall behind your peers.

Cash flow management and household budgeting are important skills we should all learn in high school. Many successful people and business go into bankruptcy every year because they do not know how to manage their cash flow. Some people, tongue in cheek, attribute happiness to a positive cashflow.

Prudent and frugal financial management reduces the pressure and stress of modern day living. It is also an important ingredient to household harmony and peace of mind.

Lessons for Our Political Leaders

The shift in our values post WWII was aided and abetted by populists in our political milieu. Some might even go as far as blaming our politicians for having taken us astray from the fundamental principles of our ancestors. Others might suggest that politics is merely a reflection of prevailing values and customs – a sort of chicken and egg question.

Regardless of what came first, the egg or the chicken, our politicians, the stewards of the nation’s checkbook, would be wiser if they took time to reflect on what the long term consequences of their fiscal actions will be on the nation and its progeny. For example:

·      What is the long-term impact of periodically lifting the national borrowing limits? On our currency and our standing in the world?

·      What are the long-term effects for the nation to live beyond its means? Monetarily and politically?

·      What would the benefits be of generating small annual surpluses? A kind of rainy day fund?

·      How can we best prioritize our expenditures and separate essential from not essential expenditures? Increase the discretionary while reducing the mandatory spending?

·      How do we help the constituency get back to the “what I need” and away from the "gotta-have” mentality?

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Footnotes

Many Americans have burdens that others do not have. If you have more than one family to support, you will undoubtedly be burdened by the financial consequences. It is quite expensive to raise one family. Raising more than one can leave you destitute.

College students are encouraged to get student loans. Properly executed these loans can make the difference between finishing and graduating or dropping out. However, many students frit the benefit away by spending the loan money to buy a car, a TV, take a vacation or other non-essential items.  

Faulty Assumptions About Immigration

As an immigrant, I stand in defense of immigration and its immense contribution to the advancement and prosperity of our nation. However,  I find many statements by proponents and opponents of immigration to be faulty or inaccurate.  We do not need exaggerations, lies, and half-truths to defend what really stands tall on its own.

A Historical Footnote

Large immigration to the U.S. started around 1850. With the advent of the Industrial Revolution, mass production required millions of unskilled and semi-skilled men and women to staff newly built factories.

Millions of laborers were needed to build the emerging infrastructure: railroads, highways, roads, sewage systems, bridges, homes, universities, and skyscrapers. They came in droves primarily from Europe, some from China, and others from Mexico. There were plenty jobs to go around.

In the post WWI era, assimilation was encouraged. Immigrants were told to become Americans, often setting aside their national customs, culture, and language.

Through the early 1920’s immigrants needed a sponsor in order to receive a visa to come over. Most, if not all, immigrants came over legally. Later in that decade, the immigration rules began to change. Some immigrants were deemed to be more desirable than others. Stricter rules of immigration were enacted. Quotas were set aside for specific geographic areas of origin. Some suggest that it was a prelude to the Great Depression.

Soon after WWII the system began to morph again. Preference in the chain migration was granted to parents, spouses, and children.  Brothers and sisters were eligible to compete within the annual quotas. The quota for Southern Europe was 30,000 per year. Northern European immigrants were not subject to the quota system and were given preference, e.g., more desirable.

Sponsors had to vouch to the U.S. government that newly arrivals would not be a burden financially on the state. Immigrants were not eligible for welfare, disability, healthcare, and other governmental assistance programs. This policy continued until the system was liberalized later on in the century.

Fast Forward

Things have changed dramatically during the past 50 years.

The need for semi skilled and unskilled jobs began to decline. Many natives found these low level jobs undesirable. Soon the country began to morph from a pair of hands labor market to a knowledge society. Scarcity of highly educated applicants forced the government to come up with a fast track visa, the HB1.

Globalization contributed to the disappearance of many skilled and semiskilled jobs as companies begin to exploit low cost labor in developing countries.  Something unheard from during the boom years, we saw the emergence of an underclass of workers, the great majority over 40 who found themselves out of work or forced to accept jobs that paid a fraction of the union wages they enjoyed in the past. 

Many poor folks from developing countries were ready, willing, and able to come over to fill the low level jobs natives shunted. They could earn in a month more than they were able to earn in a year in their home country. Millions came illegally. They soon made their presence felt mostly in the agriculture, home building, home care, and restaurant industries.

Chain migration was expanded to include brothers, sisters, grandparents, and in-laws. A special lottery was set aside to give preference to immigrants from poorly represented nations. Amnesty was granted to millions of illegal immigrants, thus fueling more illegal immigration. Special protective set asides permitted folks escaping calamities to settle in America.

Comparing the Before and After

As with any wide pendulum swing, many feel that the pendulum has swung too much toward liberalization. These folks want to see a shorter migration chain limited to children and spouses (the nuclear family), and the elimination or reduction of the lottery system. They also oppose what they consider amnesty. These folks want a more secure border to keep illegal migration from the Southern border under control.

Proponents, on the other hand, say that shortening the chain is tantamount to breaking up families … something that was the norm during the prior immigration years.  They lament the potential elimination or reduction of the lottery as an attack on people of color since most applicants come from the African continent.  Folks believe that building a wall on the Southern border is a racist tactic.

My Take

There is plenty room between these two opposing views to reach a compromise. One can understand the notion that including parents in the chain migration would reward the parents of the Dreamers for having violated the laws of the country. So grandfathering out the parents of the Dreamers seems like the right thing to do. A path to citizenship for the Dreamers needs to be in place. Understandingly a waiting period is in order – 10-12 years seems reasonable. Legal immigrants have to wait a minimum of 5 years before they can petition for naturalization.

So lets get this done …

Misplaced Priorities?

Once or twice per month I visit San Francisco. The ride, depending on traffic, takes anywhere from 45 minutes to 1 hour and 15 minutes. The distance from my home is 35 miles.

San Francisco is one of the most beautiful cities in the entire world. San Francisco joins Rio de Janeiro, Hong Kong, Sidney, and Paris as my favorite destinations.

The architecture, natural beauty, and ambiance make these cities special. Visitors never get enough; they are always eager to return. This affinity often helps us overlook any undesirable characteristics.

The Negatives

Beside the ever-increasing traffic, visitors cannot ignore the many tent cities under bridges, in alleyways or in nearby parks. Most people occupying these tents are those who can no longer afford to live in the City. A few are folks struggling with a variety of additions and mental health issues. A recent survey reports that there has been an increase in homelessness on the West Coast by 1% as a result of surge in housing costs.

A two bedroom apartment in San Francisco costs $ 3,500 and up per month. If you earn $ 20 per hour, your rent will eat up your entire paycheck, and when you factor in deductions, it will not be enough.  It is fair to say that to be able to live in San Francisco you will have to earn $ 100,000 or more per year.  Rent would eat up about 42% of the paycheck leaving about $ 58,000 to cover taxes, utilities, food, clothing, transportation, and health insurance. It is a well-known fact that the cost of living in the City is sky high.

Section 8 and BMR housing are in short supply. The little that becomes available is gobbled up in matter of hours.

The City has become the residence of choice for wealthy people and highly paid young professionals. The middle class has gradually moved to the suburbs, save those folks lucky to have purchased their residence prior to the real estate price boom, or fortunate to occupy residences benefitted from rent control regulations.

Those who cater to the upper crust of earners either spend many hours commuting to and from the suburbs or choose to sleep in their cars or in tents. Lack of toilets force people to urinate or defecate in narrow out-of-sight places.  Lack of access to showers forces some folks to go without for weeks or months. Cold winter nights expose many to freezing and other hardships. Several with addictions or mental issues panhandle to supplement any handouts they receive from welfare agencies.

The homeless population has been estimated at 8,000 to 18,000. Included but not always counted are minor children. A recent survey of the greater Bay Area indicates that 1 out of 5 children go to sleep every night hungry. This is a disgrace of gargantuan proportions. The City has launched a program to track homelessness of young adults.

San Francisco is a progressive city. It has been that way for many decades. Residents are generous and give freely to help the unfortunate. It has designated itself as a sanctuary city, open to anyone seeking asylum.

Scratching the bonhomie surface, however, reveals shocking anomalies. Below the beautiful exterior, many people live a very precarious life. Hidden from view, many people hurt.

If you listen to elected officials, you get the idea that all is being done to remedy the situation within budget limitations. However, I find this claim a laughable excuse when I look at four espoused priorities that seem to take precedence:

·      Climate change – an important issue for sure, but not one I would put ahead of helping poor people who are sleeping under bridges, especially during cold months.

·      Legal Defense Fund for Illegal Aliens – an issue at odds with our federal immigration laws. Use of limited resources that could be used to build more public toilets and showers.

·      Lawsuits of the Federal Government – political stunts to misdirect people’s attention from ordinary living problems. Politicians are using the legal system to win over what they might have lost at the ballot box.

·      Tuition for Illegal Aliens – spending limited resources to fund tuition of illegal aliens is laudable but it should not be at the expense of poor American citizens.

These initiatives are important to people and worthwhile preserving. My question is a simple one. Are they more important than the needs of the homeless? Of hungry children? I would suggest a loud No.

Life in the Fast Lane

San Francisco is not alone. The same issues can be found in many large cities … New York, Chicago, Los Angeles, Baltimore, Philadelphia, Washington, D.C., and other major cities.  Affordable housing is a scarce commodity.

Most large cities are run primarily by progressive administrations. Every four years politicians promise the sun and the moon, but deliver a sliver of what they promise. With more promises, they get reelected over again. If they fail to deliver, politicians will use worn-out excuses to blame Washington and/or heartless conservatives.

As you scan the landscape, you can find that some cities do a better job than others, and that we have much to learn from one another. The problem is the NIH (not invented here) syndrome that affects most of us. You know … we are different, we tried that and did not work, we are not as wealthy, and so on.

America is the richest nation in the world. We have spent trillions of dollars to eradicate poverty since the 1960’s. Yet we have as many, if not more, poor people than we did way back then. What happened to all that money? As it cascaded down, many seem to have taken their cut … states, cities, agencies, non-profits, and unscrupulous politicians. Some middlemen and women got very rich with the people’s money. Graft, corruption, sloppy management ate up most of the money. So much for trickle-down well-intentioned government programs!

Doing the same thing over and over expecting a different result is folly, the distinguished Albert Einstein warned us. Yet that is exactly what we continue to do with the people’s money.

Lessons from Puerto Rico

Puerto Rico was recently devastated by a hurricane. Roads were washed away. Power lines destroyed. Houses were blown away by fierce winds. Many trees were uprooted. The island is far from the mainland. Logistics became very complicated.

FEMA was not able to feed 3 million Puerto Ricans marooned in their island after the devastating hurricane.  Although “emergency” is in the name, many policies within FEMA are not adequate for problems of this magnitude.

Federal procurement policies required multiple bids. Multiple bids take several days. People were hungry, and they needed to be fed NOW. Bureaucratic red tape is not user-friendly, by definition.

Here comes a Spaniard from Washington, D.C., a well-known chef to the rescue. Within hours he started to feed people. In a few days, he was producing 3 million meals per day. The chef’s name is Jose’ Andres. He organized ChefsForPuertoRico. Jose’ taught us that if and when we unleash human ingenuity and freedom, there is nothing we cannot do.

Unencumbered by red tape, he single-handedly marshaled the energy of many to help solve the problem. It was done on a pro-bono basis, on humanitarian grounds. We all owe Jose’ a word of thanks! He has shown the way to respond to a crisis.

Lessons from Silicon Valley

The high tech industry is setting the pace to combat the affordable housing problem. Google is building about 10,000 housing units next to its Mountain View campus. It is also building a “village” in San Jose’, close to the transportation hub. Twenty-nine thousand housing units will be built to house staff additions. Google will employ 25,000 more employees.

Facebook is also leading the charge. The company is building about 10,000 units adjacent to its Menlo Park campus. It has also made generous contributions to local initiatives addressing the housing shortage.

Stanford University is doing its part. They are building additional affordable housing for faculty and students. The university has led the charge in housing for decades, realizing that without affordable housing its success in attracting first class faculty and middle class students would have suffered.

Silicon Valley is known for its creativity. You can see it in action the way larger employers are mitigating the traffic congestion, for example. Highway 101 is crisscrossed several times per day by large, luxurious busses shuttling employees back and forth from the City. Employees rather than being stuck in crawling traffic can sit back comfortably and start their work routine. Companies benefit from greater productivity. A win-win exchange!

Time to Outsource

There are other Jose’ Andres in Silicon Valley. Let’s give them the latitude to harness all available resources to solve the homeless problem in our cities sooner rather than later.  Surely they can do much better than our inept politicians and bureaucrats.

John Lennon’s song rings true … I might be a dreamer, but I am not the only one.

What do you think?