Filthy Commerce

Pick a Fight Monday: There's no reason to romanticize the Great Depression

Over the last 18 months or so, there have been a plethora of articles and blog posts about how the adults of today are revisiting the habits of their Great Depression-era forebears. ("Great Depression Holds Lessons for Surviving Tough Economy," CNN, Oct 13, 08; "Survival Basics from Depression-era Kids," Wisebread, Oct 31, 08; "Wisdom of the Aged," Time Out Chicago, Dec 8, 08; "Making Ends Meet in the Great Depression," NYT, Apr 1, 09; "Catering to the Recession Mentality," WSJ, Nov 9, 09;  "Will the New Frugality of Born of the Recession Shape a Generation?" WaPo, Dec 20, 09; "Recession Generation Will Spend Less for Life," Newsweek, Jan 9, 10)

Think about how trendy things like gardening, canning and sewing have gotten among a certain subset of domestic bloggers. I am pretty sure the trend is peaking, as there's a book about to come out about channeling your grandmother's household skills, and lifestyle books usually reflect popular sentiment; they don't create it. ("Book Aims to Connect New Generation to Grandmothers' Skills," Spokesman-Review, Jan 10, 10) And plenty of green bloggers are now claiming the Great Depression was awesome in that everyone was forced to reduce, reuse and repurpose things.

Here's what everyone conveniently leaves out: People did these things not because they wanted to, but because they had to. An entire generation did not decide to make the 1930s the greenest decade, nor did they decide to reject consumerism for DIY empowerment. Those benefits were side effects.

Did the country lose its mind for the past ten years and go nuts with buying houses they couldn't afford and lifestyles financed by credit card? Yes. Are we paying for that now? Yes. Is it kind of awesome that people are changing some of their habits so they're not merely uncritical consumers? Yes.

But for God's sake, be critical of this Depression-revival chic too. The Great Depression created staggering workloads for women ("Life In (And After) Our Great Recession," The Atlantic, Oct 09), so remember that the next time someone asks why you're not cultivating your own organic plot/canning your own preserves/sewing your curtains out of old sheets/cutting your husband's hair/following the dictate to only eat food your grandmother would recognize. If you must embrace the habits of the Great Depression, do it with your eyes wide open to whether or not they're reconcilable to the realities of today.

Pick-a-fight Friday ... Abolish the dollar!

So I'm back from the UK, and in addition to noticing how much more attractive their money is, I also noticed how convenient it is to have your £1 and £2 denominations in coins. (I also noticed how much more awesome it was to hand over loonies and toonies whilst in Vancouver. Clearly, Her Majesty's lands are on to something.)

Coins have a lot going for them: they cost less to produce ("Dollar Coins Can Save U.S. Money," Marketplace, July 23, 08), they last longer than bills, they're easier to recycle, they should -- in theory -- be far more convenient for vending machines. So you can't snort Bolivian marching powder with a one-dollar coin? It's a small price to pay.

However, dollar coins have never really taken off here. First there was the "Oh, the Susan B. Anthony coin looks too much like a quarter!" excuse in the 1970s. And while the Treasury, bless them, are trying with the new presidential dollar coins ("U.S. Mint Tries to Get Consumers to Use Dollar Coins," USAT, Aug 18, 08), it's just not taking off.

My theory is that it's because vending machines and parking meters don't often play nicely with dollar coins. In addition, who's going to use a dollar coin when the old, familiar bill is around?

Economists are fond of pointing out that people tend to adopt change only when there's a negative incentive for not changing, i.e. more people will bring bags to the grocery if they're charged for sacks compared to when they get money for bringing in totes. So I'm proposing that the government just impose the change for us. Banish the $1 bill and its lesser-used cousin, the $2. Stop making it. Start pumping more coins into circulation. This move will save taxpayer money in production. It'll alter the way people spend -- which will goose our economy. It's greener. And it'll blow the market for adorable changepurses wide open. Who's with me?

Pick-a-fight Friday ... It's more fun to read about bad personal finance decisions than good one

So I just read the preview for the Sunday NYT Magazine article, "My Personal Credit Crisis," wherein NYT economics reporter Edmund Andrews, who pulls in $120K per year, was facing foreclosure on a $460,000 house. Why? Consider these factors:

Pick-a-fight Friday ... No room for brand names at the hospital?

Fun fact: when you are checked out of a hospital, a nice -- if brawny -- nurse puts you in a wheelchair and wheels you to the door, an experience that is both luxurious and infantilizing. At one point, we passed a clutch of pretty women in red scrubs heading into the hospital.

Everyone who treated me had blue-hued scrubs -- light blue for the surgical team, darker blue for the nurses on the neurology floor. So I asked, "Is there a color-coding system for the scrubs at the hospital? Who wears red?"

The nurse told me that the ladies in red were actually pharma sales reps. UCSF apparently instituted a policy recently that requires the sales reps to be clearly and plainly attired in a way that makes them look distinct from the medical personnel.

I thought it was interesting that this was a hard policy, as I had seen more than one surgeon wearing caps with a corporate name emblazoned across the top. I wondered: What is the distinction between the person who's paid to promote a specific drug and the person who's wearing a freebie surgical cap? Is one more legitimate because we assume the doctor applied a measure of discrimination to what they wear and carry? Or is it more likely that the doctor happens to use the Plavix-branded clipboard because it's there?

I thought it was fascinating how companies tried to get their names across in a hospital. In the neurosurgery ward where I recovered, my room was sponsored by one company, the juice box on my breakfast tray was from some major food vendor and the hideous putty-colored socks the nurse gave me had another brand-name embossed on the soles. None of these brands are coming to mind right now -- blame the hydrocodone I've been taking since Tuesday night -- but there has to be some merit to the "stick it in front of their eyeballs" strategy. Right?

Pick-a-fight Friday ... Does peer pressure affect your spending?

If you've got job security and some liquidity, it's a great time to be an American consumer. Contractors return your calls (promptly and politely), plane ticket and hotel room prices have fallen through the floor, retailers are constantly throwing sales.

Except ... are you really comfortable spending? "When You're Flush, But Acting Flat Broke" (WaPo, Apr 16, 09) posits that plenty of consumers are "handcuffed by psychological traps that cause them to tighten their purse strings even though economic hardship is not their reality."

Is it any wonder? When you read things like "In an Age of Austerity, the Miserly Thrive" (NYT, quaintly discovering that frugal people exist, Apr 10, 09), it's tempting to assume that conspicuous consumption has been replaced by conspicuous scrimping. People are now comparing shrinking grocery budgets the way they used to compare swelling SUV sizes. There is the psychological phenomena of using other folks as your metric for how you should be spending.

So let me throw this out to you: Do you feel better about saving or spending money when you see other people behaving similarly? Or are you more reassured when you see that your financial habits are exactly the opposite of everyone else's? Who in your life has the ability to make you feel better or worse about your financial decisions?

Pick-a-fight Friday ... Your sackcloth and ashes are designer, aren't they?

So two days ago, the WaPo reported on the aspiring 5-star Salamander Resort & Spa, which is currently under construction in Middleburg, Virginia. The Salamander's future is in doubt, because:

Salamander's business strategy counts on corporations holding meetings and retreats, but that element of high-flying corporate life has taken on a bad odor since taxpayers began bailing out the financial sector. Congress has put limits on luxury travel in bailout legislation. In the travel industry, there are tales of nervous executives asking hotels to delete the words "resort" or "spa" from booking contracts.

And these days, the prevailing ethos regarding the necessity of a luxury resort is along these lines:

"Right now is not the time to open a resort or a spa. I mean, it just grates on you," said Middleburg town councilwoman Catherine "Bundles" Murdock. "It would just look terrible. We need to open up soup kitchens and victory gardens."

-- "In Recession, Luxury Resorts Are Equated with Excess"

And then yesterday, in Forbes' helpfully-titled "What Not to Talk About During the Downturn," would-be consumers are advised, "You're probably still planning at least one vacation for 2009 ... However, it's important to be sensitive around those who might be cutting back or skipping a holiday altogether. Only discuss the basic plans for your trip."

(FYI: You should also refrain from discussing your spa plans, your new Rolls Royce, your bling and your summer place on the shore. Truly, Forbes strives to provide personal finance advice that applies to all walks of life.)

This sudden public sensitivity to how people are spending their private money has me wondering ... Is is now bad manners to go on walkabout? Since when is it a crime to jump on travel deals?

Pre-Pick-a-Fight Friday: Would fewer nonprofits really be such a bad thing?

A growing story in these, our recessionary times (TM): the predicaments not-for-profit organizations face.

The Nation sounded the first alarm with "Is the Economic Mess Going to Kill 100,000 Nonprofits?" on March 13, 09.

(SPOILER ALERT: The estimate comes from public policy professor Paul Light, who has been watching the downward trajectory of nonprofits for some time. I cannot find the basis for this estimate, which is mentioned once and then never spoken of again.)

ANYWAY ... the NYT picked up the predicament beat last Sunday with "As Detroit Struggles, Foundations Shift Missions." The nut of the story: since auto money is drying up, so are local grants -- right as more organizations find themselves being hit up to help the community. And the way some nonprofits and foundations are responding to hard time is by pooling their resources and working toward a common good.

Then today, the Gray Lady ran the results of a recent poll: "Financial Safety Net of Nonprofits Is Fraying, Survey Finds." By "fraying net," the article reports that only 12% of nonprofits will end their year with an operating surplus, compared to 40% the prior fiscal year.

In all three of the articles, there is the uncontested notion that any nonprofit shutting down is automatically a bad thing. Yet I wonder: Is this truly the case? Might the nonprofit sector benefit from the consolidation of like organizations, an emphasis on bottom-line results like the for-profit sector has, closer scrutiny over how effectively they're deploying resources?

So I throw it open to you: Would a shakeup of how the nonprofit sector operates be such a bad thing?

Pick-a-fight Friday ... How do you treat your small businesspeople?

I've cut back my comic-book buying over the past few months. One reason: I am tired of crossovers. It's freakin' endless at this point, and each story arc is more idiotic than the last. It is making me hate the serial nature of comic storytelling, and when you're tired of that, you're tired of life itself. Another reason: There comes a point in a woman's life when she thinks, Long white cardboard boxes full of comics do not make a foundation for a decor theme. Finally: Buying single-issue comics can be darn pricey.

Switching to trade paperback buys for my comics made sense on many levels, but I had hesitated to make the switch for one big reason: the relationship I have with my comic book shop. It is very easy to curb your spending when the money's going to a nameless and faceless corporation. But when it's going to Patti, who has your pull list memorized and has even made recs that opened your world ... how can you look someone in the eye and say, "Sorry. I gotta watch out for number one?" I actually had a sit-down with Patti; now, she keeps her eye out for trades and we tactfully avoid mentioning how my comics spending is down 70%.

I'm not alone in this aspect of social spending. Today's "The Guilted Age: Spending to Keep Others Afloat" (WSJ) talks about other people who do this:

Donations to many charitable institutions are down, but that may not be the correct measure of the nation's philanthropic impulses. Writing a check to an institution is impersonal, abstract and easy to quit. Far more difficult is canceling the kids' weekly music lessons when you know the piano teacher's husband just lost his job. Or firing the house cleaner who greets you every week with a new photo of her baby.

There's more than a touch of self-interest mixed in with the altruism, of course. Those who can afford luxuries like private piano lessons and weekly house cleaning aren't keen on forfeiting such luxuries -- something families freely acknowledge. But they also say their decisions are shaped in part by the pain that cutbacks may cause others.

"What we buy or stop buying, when we buy, for whom, and how much we spend are never simply decisions to maximize our own interests," said Viviana Zelizer, a Princeton professor who studies the intersection of sociology and economics. "The monies we spend signal which relationships matter to us."

So let me throw this out for discussion: How do you gauge which people get your money and which ones do not? Do you even think of considering who "deserves" your money based on circumstances outside the purview of your client/vendor relationship?

Pick-a-fight Sunday ... the real bonus is that you're still employed

"Reading A.I.G. Planning Huge Bonuses After $170 Billion Bailout" (NYT, Mar 15, 09) really got my day off to a brisk start, in part because a lede about millions of dollars in taxpayer money being paid in bonuses to the execs who created the need for a bailout will stoke anyone's populist fury.

AIG is holding firm on paying the bonuses too, saying it's contractually obligated to do so. According to "AIG to pay $450 Million in Bonuses" (WSJ, Mar 15, 09):

Mr. Liddy wrote that "outside counsel" had advised that the previously agreed to payments to employees at the financial products unit are "legal, binding obligations of AIG." He wrote that there are "serious legal, as well as business, consequences for not paying."

"I do not like these arrangements and find it distasteful and difficult to recommend to you that we must proceed with them," Mr. Liddy wrote, but added, "Honoring contractual commitments is at the heart of what we do in the insurance business."

BTW, the real sticking point is not with insurance execs getting bonuses, but rather that the execs in the financial products unit -- the one that prompted the bailout disaster -- will. I love that nobody in that unit has enough shame to bypass a bonus.

But putting that aside, I'd like to take a look at one seemingly-unquestioned premise here: that employees are entitled to bonuses.

Look, I enjoy the occasional annual bonus at work. But I also admit mine is tied to the company's overall performance, and it's not a massive part of my annual compensation. It's exactly what it says it is -- a bonus. I recognize that for some professionals, the bonuses are actually a large percentage of annual compensation. But I wonder if that's wise.

So let me put it to you, the audience: Are bonuses really a valuable or necessary part of a salary structure? Should they be abolished in favor of higher regular salaries? Or should they be given under specific conditions?

Pick-a-fight Friday ... Weddings are for dopes, you wanna elope?

There is a trippy and surreal quality to watching the conventional wisdom being conceived and crafted, which is why I collect books about the dot-com implosion of the early Aughties. My favorite example of this book is The New Gilded Age: the New Yorker Looks at the Culture of Affluence, with its positively quaint profiles of Nerve.com and the Silicon Alley excesses of the late 1990s.

I am wondering if another New Yorker-spawned book, One Perfect Day: the Selling of the American Wedding, is going to have a similarly dated feel. There has been a wave of articles talking about engaged couples scaling back their planning for their wedding day: "Weddings Are Now a Luxury" (SF Chron, Feb 1, 09), "Love in a Time of Recession: Scaled-Back Weddings" (CNN, Feb 13, 09), "Keeping a Wedding Cheap" (WSJ, Mar 12, 09)

None of these articles have much statistical data; they're all relying on first-person reporting. So I'm throwing it open to you all and your first-person perceptions and observations. Do you see people scaling back their wedding plans? Or are they like, "I'm doing my part to help the local businesses! Tulle steam ahead!"

Just answer me this ...

At this point, is there anyone left in the English-speaking online world who hasn't absorbed the message that coupons can save you money, you shouldn't buy things you don't need, and sometimes, tap water tastes just as good as the bottled stuff?

If there's not, please direct that person to the above paragraph.

Pick-a-fight Friday ... What is this "spend money to save money" business?

I first saw this on Yahoo: "Five Memberships Worth Signing Up For" (Oct 17, 08). It detailed all the things you should spend money on -- amusement parks, AAA, Costco and other warehouse clubs, AARP, zoos & aquariums -- with the argument that these things quickly pay for themselves.

Then there was the article on how tough it was to live on $500K per annum, with the argument that it takes money to make money.

Then there was Kiplinger's article "How 4 Are Saving $17,860 a Year," in which people saved money on insurance policies by going through Costco. The membership fee was presumably offset by the $300 in savings one person reaped.

All of these point to the idea that you have to have money to save money. Anyone who's been reading for a while is familiar with the Sam Vimes Theory of Economic Injustice:

Pick-a-fight Friday ... Debt's a deal-killer. OR IS IT?

Yesterday, author and money coach Jean Chatzky did a live chat on WaPo wherein she fielded variations on the same three questions:

-- I'm in a lot of debt and my credit is hosed. How can I convince my sweetie that it won't hurt them?

-- I love my sweetie; their credit rating is in the single digits. Should we get married?

-- How can I minimize the damage that my feckless ex has done to my finances and my credit rating?

This chat seemed particularly well-timed, coming as it did on the heels of a romantic comedy wherein the definition of "happy ending" was "And then a rich dude came along and paid off all her debts. The end!" In the movies, serious debt is but a wacky obstacle on the way to happiness. But in real life ...? We've seen debt can kill a marriage.

A lot of married couples start off with one or more parties bringing debt into the mix. A lot of people may delay getting married until one or more parties gets a handle on their finances. And some might even walk away from a lover who can't get it together financially. So I'm throwing this one open to you all: Is debt ever a deal killer in a serious relationship? Does it depend on the debt?

Pick-a-fight Friday ... Love don't cost a thing. OR DOES IT?

These are the only questions I can ask on Friday, February 13 ...

If you are partnered: Do you and your sweet baboo(s) exchange tokens of esteem on St. Valentine's Day? Or do you write the whole thing off as an invention of rapacious greeting-card barons?

If you are not partnered: Are you picking up flowers, candy or baubles for anyone (including yourself)? When I was single, my parents used to send me a tin of chocolates every year. (I know! Awww!) Does this holiday fill you with anger and bees, or are you just holding out to February 15 and the inevitable markdowns on red and pink merchandise?

And for everyone: What's your take on this holiday in general? Anyone up for a return to Lupercalia, so long as no animals are harmed in the making of sacrifices?

Pick-a-fight Friday ... Is the mall rat an endangered species?

By this point, we've read enough about the death of the American mall to assume it's a foregone conclusion:

"Big Box and Beyond" (WaPo, Nov 18, 08) -- "No real estate trend is forever. Which is why it is beyond time to start thinking creatively about what to do with all the big-box stores in our burbs that become unsuited to their original function long before they physically wear out."

"After the Mall" (The Big Money, Dec 26, 08) -- "Remember, malls are about escaping from the world and reveling in consumer fun. Spending money during the recession already requires a suspension of disbelief. Confronting an empty storefront is like walking right into a slap of harsh reality."

"Our Love Affair with Shopping Malls Is On the Rocks" (NYT, Feb 1, 09) -- "So the mall we married has become the toxic spouse we can’t quit, though we really must quit, but just not any time soon. The mall, for its part, is wounded by our ambivalence and feels financially adrift."

But is the mall dead ... or merely evolving? What else would you call the agglomerations of open-air big box stores you see ringing the 'burbs now, the kinds of places that have an Old Navy, a Barns & Noble, a Bed Bath & Beyond, a Babies R Us, and a few restaurants -- your Fuddruckers, your Mimi's Cafes, a smoothie or pretzel shop? Is there a place for aggregations of retailers? Or are we moving away from the age of retail as a destination?

Pick-a-fight Friday ... None of us will ever decorate again. OR WILL WE?

So we all know Domino's folding, and while every magazine's death diminishes me as a media professional, blah blah blah, I am sort of surprised by companies' short-sightedness in shuttering their shelter mags. They are shooting themselves in the feet.

Pick-a-fight Friday ... Two can't live as cheaply as one?

When Phil and I went through our premarital counseling, one of the smartest pieces of advice we got was this: "Don't make any big purchases your first year. Don't. Don't do it until you've figured out each other's money styles and found a way to work together. The last thing you need in this process is new debt."

Debt at any process in a marriage can be a big stressor. The toughest year of my marriage was the one in which we bought the house, in part because we did suddenly have this big debt and these new expenses, and we had to learn a new way of working together for the financial health of Team Schmichaels.

And money is stressing many marriages to the breaking point. In "The Great College Hoax" (Forbes, Jan 14, 09), one couple divorced under the strain of $194,000 in law school debt. In "Breaking Up Is Harder to Do After Housing Fall" (NYT, Dec 30, 08), divorcing couples are now arguing over who gets stuck with the depreciating house. And in "Daddy's Home, And a Bit Lost" (NYT, Jan 9, 09), one angry wife of a laid-off exec has made it clear why she's unhappy: "My job was to run the household and the children's lives ... His job is to provide us with a nice lifestyle."

So let me put today's question to you: Is money truly a contributing factor in relationship breakdowns? If not, what issues are the money troubles masking? What issues do you think are created when debt is part of your shared household?

Pick-a-fight Friday ... shopaholics are so cute ... until they're not?

Every day, as I walk to work, I see a billboard for the upcoming Confessions of a Shopaholic and I say to Phil, "Oh, that movie missed the zeitgeist."

I'm the kind of grumpus who thinks that fictitious compulsive spenders aren't especially adorable, and I dislike deus ex machinae plot twists that iron out all their financial woes. And I don't think this is the kind of environment where we want to give magical financial thinking the thumbs up.

I can't help but suspect that committed shopaholics are looking at retailers' frantic January sales efforts and thinking, "At last, I get more for my money!" This might not be a good thing: as the WSJ reported last month:

[The] combination of retailers' aggressive discounting and current economic anxiety "is a disaster" for people who feel a compulsion to shop, says Terrence Shulman, a social worker and founder of the Shulman Center for Compulsive Theft and Spending, in Franklin, Mich.

The bombardment of promotional emails and discount coupons from retailers this season is "like giving matches to a pyromaniac," says April Benson, a New York psychotherapist who specializes in the disorder.

-- "This Year, More than Ever, It's Tough to Be a Compulsive Shopper," Dec 16, 08

However, let me stress: I am a grumpus. And I recognize that movies are often diversionary and nobody is going to be making a rom-com about someone who lived below her means and calmly sailed through a downturn. But I have to ask: a movie about no-consequences spending sprees when the country's busy learning about the consequences of its spending spree? Really?

So what's your take: do you think Confessions of a Shopaholic is hitting at the right moment, or is it a tad too late?

Pick-a-fight Friday ... Recessionfreude: Do we need it?

For all of the hand-wringing reportage that today's economic climate has inspired, I've noticed a common thread creeping through it all, an "Oh, thank God, those insufferable rich people are finally getting what's coming to them and this culture of tacky excess will be shamed out of existence" sentiment, if you will. So what if the rich have to keep their bling under wraps? ("Rich Rein in Lavish Habits as Net Worth Takes Big Hit," LAT, Dec 26, 08)

Recessionary effects are someone else's problem, presumably because someone else is responsible for the recession. Let 'em suffer!

I freely admit to indulging in a little recessionfreude every now and then. When I read "Nearly the End of the Line for SUVs" (NYT, Dec 24, 08), my first reaction was to take a moment of silence for the poor workers about to lose their job, but my second was to ardently hope that the CEOs of Detroit's (Not So) Big Three would pull an Obama, buy a big chunk of prime time, and spend it all rending their garments on camera and tearily begging forgiveness for not producing more fuel-efficient, economy-friendly vehicles.

It'll never happen, which brings me to my question. Is this "Behold the folly of companies and consumers!" sentiment actually helping people avoid a mental depression? (Listen to "The Mental Side of the Recession" via NPR)

Or is this merely the latest flavor of the "It's not me, it's you" mindset that lets people remove their own spending from a wider social context? Do you indulge in recessionfreude?

Pick-a-fight Friday ... Financial resolutions, yes or no?

It's January 2. Perhaps you're still flush with good intentions, or perhaps you've already blown the "Cut back on the carbs" vow and are like, "I might as well nuke the list now ..." Whatever your mental state, let it inform your stance on this Friday fight:

Setting financial goals as New Year's Resolutions is a ticket to failure.

OR

A New Year's Resolution is a great way to articulate a financial goal and give yourself a deadline to achieve it.

Which side do you take? And why? Explain your stance in the comments.