The wages of keeping up with the Joneses


BOSTON -- May I pause to acknowledge a small, historic moment. On June 10, 1998, Scott McInnis, a Republican congressman from Colorado, called upon the American people to take the frugality pledge: "If you can't afford it, don't buy it!"

This stirring cry for a personal balanced budget, this summons to debt abstinence, was uttered as the House passed a bill to make it harder for people to declare bankruptcy and wipe their fiscal slate clean. As many noted, more Americans went bankrupt last year -- 1.3 million -- than graduated from college. Tightening the rules was cast as a morality play about "personal responsibility."

Sex and money

Now, if the debate over debt carries echoes of the debate over sex, that's understandable. We deal with sex and money in more or less the same way.

On the one hand the culture markets sex with an unrelenting hard sell. Then we turn around and tell kids to "just say no."

So too, we let credit card companies interrupt dinner with the offer of a "preapproved" cards and send out 2 billion solicitations a year to everyone from your college daughter to your Labrador. Then we tell individuals they are solely responsible for racking up debt.

Moreover, in the current consumer culture, frugality is practically unpatriotic. Our surging economy is based on buying more stuff. The much-vaunted consumer confidence is actually the confidence that we'll be able to pay tomorrow for the stuff we buy today.

Nevertheless, the frugality pledge resonates strongly with all who harbor the guilty thought that we are spending more than we should, we need or we have. The real financial danger in this country isn't just real deadbeat bankruptcy. It's debt.

What Mr. McInnis didn't say is that household debt rings in at $5.5 trillion. Credit card debt has doubled in this decade alone while the average American household is only saving 3.5 percent of disposable income -- half what it saved 15 years ago. One-third of Americans now describe themselves as heavily or moderately in debt. And this is in an economic boom.

The typical middle-class American is, in the words of economist Juliet Schor's new book title, "The Overspent American."

In a chilling and convincing argument, Ms. Schor says that one of the major reasons middle-class Americans are living in debt, or ,, barely making it from paycheck to paycheck, is "the new consumerism." In this world, "What we want grows into what we need, at a sometimes dizzying rate . . . being middle class is no longer good enough." More than a quarter of the households earning $100,000 a year now say they can't afford to buy everything they need.

The main engine of a troubling cycle of "see-want-borrow-buy," she says, is "competitive consuming." We are still trying to keep up with the Joneses, but today the Joneses aren't our neighbors or even friends. They're the "friends" we see on television, the lifestyles of the rich and famous.

This is the second book that Ms. Schor has written about the work-and-spend lifestyle. "The Overworked American," about long hours, led logically to "The Overspent American," about high bills.

In one company she studied, the average, nonmortgage consumer debt was $13,700. The employees "identified debt as the single most important factor keeping their noses to the grindstone." This time, seconding the appeal of a growing voluntary simplicity movement, she cites people who have downshifted, trading money for time.

Recession whiplash

Of course, if everyone immediately joined a consumer temperance movement, we'd get a bad case of recession

whiplash. But there's little worry of that. Halfway through her book tour, at a San Diego television studio, Ms. Schor met a makeup woman in the throes of bankruptcy. The economist was horrified and sympathetic until she discovered the woman was still driving a Range Rover with huge payments.

And sometimes even the frugality pledge isn't enough. The problem with the House bankruptcy law is that it changes the game for the debtor, but not for the credit industry. The credit card pushers can go on passing out free samples, making it easy as ever to get into debt but harder to get out.

In the end, says Ms. Schor, "The way we spend is not just an issue of personal responsibility, there are personal and cultural pressures. It's a social act, and we need to look at the whole structure."

Ellen Goodman is a syndicated columnist.

Pub Date: 6/15/98

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