The Illusion of the American Dream

This story in the New York Times over the weekend hits on a number of hot button issues around here - debt, consumption, "prosperity" to name a few.

Someday things will likely turn full-circle in the U.S. and people will again live within their means, save the old-fashioned way, and learn anew the virtue of humility. Until then, we're in for:

Envy, Anxiety, Secrecy, Taboos: The Subject Must Be Money
By ALINA TUGEND

I’M as guilty as the next person. I’ve sat around with my pals wondering how a neighbor, a colleague, or, yes, a good friend, can possibly afford to put that huge addition on their house. Or take those many overseas vacations. Or pay for the private schools and the fancy summer camps and the second home.
Some people we just write off as trust fund babies or hedge fund zillionaires or lucky dogs who got into the stock market at the right time and cashed out.

But others are more perplexing. They look like us. They seem to come from roughly the same backgrounds as us. But they sure don’t act like us.

I don’t exactly envy them; I’m fairly satisfied with our lives. Oh, occasionally I wish we had that house on Martha’s Vineyard, or didn’t have to choose between remodeling the bathroom or taking a summer trip, but generally I know how fortunate we are.

But I do sometimes burn with curiosity about how they do it. And wish that talking about money was not so fraught in this society so I could just ask them to explain it.

They say that it's easier to talk about sex than to talk about money. Common wisdom is that money is one of the leading causes of divorce.

An afternoon talk show once had on a workaholic husband with his shopaholic wife. He was a doctor who worked so much that he was rarely around the family, so the wife began to spend money to get back at him. He had to work additional shifts to pay for her additional shopping, so he was around even less, and so she shopped even more. The cycle repeated a few times until they wound up on Dr. Phil.

At least they didn't go into debt - he was making hundreds of thousands of dollars a year, but she spent it all. For most, debt is a huge factor.

Sometimes it seems as if we must be doing something wrong because we can’t possibly afford what they can — even if we don’t want it.

The truth is, however, that we don’t know the truth, said Shira Boss, author of “Green With Envy: Why Keeping Up With the Joneses Is Keeping Us in Debt,” (Warner Books, 2006).

“The accessibility and availability of debt has created a fiction that wasn’t there 20 years ago,” Ms. Boss said. “We don’t have a grip on who can afford what. Your external lifestyle is a lot lower when you’re living within your means — you can see extravagance, but not financial security.”

Ms. Schappell said that editing her book made her realize that “all the ready credit gives of the illusion of living the American dream.”

In the introduction to their book, Ms. Schappell and Ms. Offill note that “economists report that middle-class families are now carrying record levels of credit card debt, going without health insurance and filing for bankruptcy at several times the rate of the early 1980s.”

“Turns out those McMansions and shiny S.U.V.’s have us mortgaged up to our eyeballs, but until the wolf is truly at the door, you won’t find many of us admitting it.”

It's hard to believe that most people don't see this right in front of their eyes, but the allure of easy money is just too powerful a temptress.

Back in the 1980s, when credit cards first became popular, after individuals would spend up to the limit on their fist credit card, they would say, "I just spent $1,500 and it only costs me $25 a month". Naturally, it would take decades to pay off the debt at this rate, but that was unimportant compared to the feeling of "getting something for nothing". They soon got another credit card with another $1,500 credit line.

Since then, debt and consumption have escalated to a point that few could have imagined 20 years ago. Some blame Madison Avenue and our culture of consumption.

“I strongly disagree that it’s human nature,” said Allen D. Kanner, a psychologist and co-editor of “Psychology and Consumer Culture” (American Psychological Association, 2004). “Our nature is being molded pretty powerfully by the media. If we started a trend to extract marketing from our lives, it would go a long way to reducing money anxieties.” Mr. Kanner is also a co-founder of the nonprofit Campaign for a Commercial-Free Childhood (www.commercialfreechildhood.org).

Tim Kasser, an associate professor of psychology at Knox College in Galesburg, Ill., said the answer was to want less.

There is a small movement, he said, heir to many such groups in the past, called voluntary simplifiers who have chosen to make do with less. This doesn’t mean they live puritanical lives without modern conveniences, but rather they have consciously chosen to make less money and work fewer hours to spend more time with families and friends.

A study in 2005 of 200 “voluntary simplifiers” in 48 states compared with 200 similar people in the same geographical areas who lived regular lives found that the simplifiers were happier according to a variety of criteria, said Professor Kasser, author of “The High Price of Materialism” (MIT Press 2002). (Details about the movement can be found at www.simpleliving.net.)

If the "voluntary simplifier" movement catches on, that could wreck the whole economy. Our finely tuned financial system is now squarely founded on the expectation that people (and government) will continue to borrow and spend without concern for the long-term consequences.

Somehow, it seems that the simplification won't come voluntarily for most Americans.