Lessons from the Great Depression

As we prepare for the historic inauguration of our 44th president, another moment from history weighs heavily on the minds of many Americans.  Although few predict a downturn whose magnitude rivals that of the Great Depression, there exists great uncertainty over just how much deeper the crisis will plunge before it bottoms out.  The Great Depression saw unemployment rates of 1 in 3, the demise of numerous businesses small and large, economic scarcity.  It was a time of frugality and thrift, imparting lessons the generation of the 30’s carried with them for the rest of their lives.

Today’s young people are several generations removed from the lessons of the Great Depression.  We’ve never experienced a major economic downturn, never known what it means to be thrifty or frugal.  Growing up, “thrift” and “frugality” were negative terms associated with poverty or with being a cheapskate.  The cultural landscape had changed much in the intervening decades, and we missed out on the lessons from our grandparents so that even if we thought we knew what “frugality” meant, it meant nothing to us compared to it they meant to those borne in times of true economic hardship.  I may willingly cut back on dinners out with friends and beef up my cooking repertoire to save money, but how can that compare to my grandmother at twelve in wartime China, shelling peanuts to support herself, her mother and her cousin?

Many of the tips that helped our grandparents survive the depression are strikingly relevant today.  In fact, they are universally relevant, in both prosperity and in malaise.  And so, as I anticipate tomorrow’s inauguration I take a moment to reflect on some of these universal principles.

Spend less than you earn.  It may seem so basic it isn’t worth mentioning, but with the average American household in roughly $8,000 of credit card debt, as a nation we haven’t been doing very well with this.  The glut of cheap credit in the past two decades has certainly contributed to the rise in living beyond our means, but so too has a shift away from savings and buying on credit.  The concept of saving up for a major purchase seems almost foreign in the current cultural landscape; so much easier to just put it on plastic and worry about it later.

The difference, though, is that putting it on plastic means racking up 20% or more interest, which creates a snowball effect of debt.  Down the road as the interest from the initial debt causes the debt to grow faster and faster, mounting debt payments mean even less money left over to cover basic necessities, let alone emergencies or other major purchases.  Thus even as the original debt accumulates interest, we are forced to take on even more debt to cover daily needs.

Saving up for major purchases solves this problem of snowballing credit debt.  It also creates a cooling off period that tempers the impulse purchase, allows us to search for a true bargain, and avoids buyers remorse.  Without this, we have become an instant gratification culture, and one that pays through the nose for the privilege of instant gratification at that.

Some argue that credit card debt has become necessary to deal with the great economic pressures on the middle class.  Car payments, school loans, personal computers, iPods, fancy cell phones and cable TV deals … never before has the definition of “middle class” included so many material possessions.  Items once deemed luxuries became inflated to necessities, and we’ve had to work harder than ever to spin our hamster wheels and stay afloat.  Yet this, too, is symptomatic of an entire nation that has lived beyond its means, if the material definition of “middle class” is truly beyond the reach of those it is supposed to encompass.

Part of the scope of this problem lies in larger societal forces that are invested in the creation and propagation of a nation of consumers.  Part of the solution lies in individuals taking a stance to living within our means, as generations before us once did.  To paraphrase my dad (a quote worthy source if I ever saw one), the difference between spending $1 less than you earn and $1 more than you earn is peace of mind.

Improvisation. Growing up, my favorite books included the Little House on the Prairie series, in part due to the descriptions of the household items built by hand.  These days when we need something we go out and buy it; in Laura Ingalls Wilder’s time and through the first half of the 20th Century, the first instinct to fill a need was to make an item or to improvise a solution.  Creativity comes not just from artists, musicians, or the “go to idea guy” at work; the word “create” lies at the root of “creativity.”  To create is to stimulate both hemispheres of the mind, to improvise is to meet the challenge of filling a need by alternative means.  Our economy may have evolved to the point of filling wants more than filling needs, but constant engagement in this challenge of creation keeps life fun, exciting, and produces amusing results.

Self-worth is not solely defined by material possessions.  This point is thrown into sharper relief during a time of economic scarcity, but it bears constant reminding that there are multiple ways to define worth: both self-worth and worthwhile pursuits in life, in both career and leisure.  In the last century we have created entire new industries.  As a result, the sheer breadth of career and leisure options are wider than ever, yet we’ve narrowed the scope of our leisure activities and measures of self-worth.  A job has become a major marker of identity, leisure activities are primarily dominated by the entertainment industry to the detriment of civic engagement, reading, interpersonal relationships, pursuit of personal interests.

A classmate once said to me, “‘Hobbies’ sounds so 50’s.”  I beg to differ; I love my hobbies far more than all combined products of the entertainment industry (and yes, you may include video games in that category as well).  Among other benefits, they allow me to define multiple parts of myself, so that I am not just a “student” but also a “crafter,” “baker,” “runner,” “reader,” “occasional writer,” “photographer,” one who loves to invite friends over to make a meal and share in the fruits of our labor.  Many of these pursuits have fallen by the wayside in favor of entertainment that must be consumed with hard-earned dollars.  In the process, we limit the avenues by which to create a sense of self and procur a feeling of accomplishment.

The tangible and intangible lessons of the Great Depression are many.  For me, wellness means bringing balance through development of multiple areas of our lives.  Money shortcuts this process by buying a product we might otherwise be forced to make or to improvise.  And yet often it is the process, more than the end result, that creates the greatest lasting impact on our selves and our personal well being.

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