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July 22, 2013

Is Money Really "Too Important"?

The Editorial Staff have noticed a definite air of unreality to many of the things she has been reading of late. In this example, an academician has children and suddenly realizes that there's more to life than pursuing one's dreams:

I remember that, when I was a kid, my family, friends, teachers, and other role models told me countless times that money wasn’t the most important thing. Children were, and still are, encouraged to chase their dreams, no matter what. Evidence of that is all over popular media, with movies about underdogs who “make it” and songs about more of the same. In college, some professors, advisers, and others may try to ground students in reality, but by then it’s too late; most students already have unachievable aspirations.

To my own disappointment, I’ve made a decision. As I find it harder and harder to make ends meet, even with my supposedly white-collar job as a tenure-track professor, I’m going to encourage my children to do what they love, but only to a point. I’m going to tell them the thing that I wish someone had told me: They have to make money. Unfortunately, money is too important.

The bolded part struck us forcefully (no, not literally - that would be painful!). Robert Samuelson offers some related thoughts about the gap between what we have and what we seem to think we have a right to expect:

If proverbial Martians descended on Earth and toured America's crowded shopping malls, traveled its congested highways and sampled its technological marvels - from the many cable channels to ubiquitous smartphones - these visitors would be hard-pressed to describe the United States as poor or its economy as failing. The truth is that, even in its current unsatisfactory condition, America is an immensely wealthy society. It produces $16  trillion in annual goods and services, provides 136 million jobs and supports a median household income of $50,000.

I do not cite these facts to excuse our economic faults. But it's important to keep perspective: For most Americans, the economy is performing adequately, though obviously not spectacularly. Despite a woeful 7.6 percent unemployment rate, it remains true that 92.4 percent of workers have jobs (counting discouraged workers who've left the workforce would reduce this to about 90 percent). We have two distinct economies: one that inflicts acute pain on a minority of Americans but inspires mass political and media criticism; and another that creates huge wealth for the majority but is virtually ignored. Though distress is concentrated, unhappiness is widespread.

The standard explanation for this is well-known. We expected better.

For those of you who have older children, have you encouraged them to "follow their dreams"? Is dreaming really an appropriate goal for adults (and if it is, are all dreams created equal?).

When our sons neared the age of majority, we recall advising them to think hard about what kind of life they wanted for their families. Once that decision was made, they needed to find a job that paid an appropriate salary and work hard. They needed to have long range plans that didn't include assuming the status quo was a given and would always continue. Oddly, we don't remember anything about following dreams (unless one considers finding someone worth loving and making an effort to perpetuate the species to be "following a dream").

People seem to be putting the cart in front of the horse these days. During the child rearing years, we decided that raising a family in accordance with our values required a full time parent in the home. Consequently we quite literally never went out to dinner, and economized in ways that allowed us to live comfortably on one salary and maintain a healthy savings account. We weren't poor - far from it. We were living within our means.

We don't understand the idea that anyone can (or ought to be able to) decide on a career without giving serious thought as to whether it pays enough to support basic goals like marrying, raising a family, living in the country, or living in the city?

Money isn't a goal: it's simply the means to some larger end. So how can money be 'too important'?

The author seems only to have decided that money was too important when he had children. But children - especially babies and toddlers - really aren't all that expensive unless one buys into the notion that they must be given everything they want. The problem this gentleman is facing isn't that money is too important - it's that his desires are out of line with his willingness to work and his choice of career.

We just finished an interesting novel that deals with a lot of these issues. In it, an electromagnetic pulse wipes out all electronics. Because nearly every mechanical device these days has some sort of semiconductor or computer chip in it, it also wipes out basic utilities like power and running water. Without computers, banks can't operate and people are quickly reduced to trading tangible goods.

All the assets stored up for emergencies or old age - savings accounts, money market funds, 401Ks, IRAs - become worthless in an instant. What really matters is the ability to produce something someone else needs to survive and trade it for what you need to survive.

Which is really all money was ever about. How did we forget that? Perhaps more importantly, what does it say about our values that someone with a college education can talk about "money" being "too important" without any understanding of what money really stands for: the exchange of value?

Posted by Cassandra at July 22, 2013 06:38 AM

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What really matters is the ability to produce something someone else needs to survive and trade it for what you need to survive.

*lawyers everywhere shudder*

Posted by: spd rdr at July 22, 2013 09:22 AM

The problem this gentleman is facing isn't that money is too important - it's that his desires are out of line with his willingness to work and his choice of career.


Another important thing about money is that it allows a time gap between the value and the reward, so you can store up a lot of work you did early and choose to reap its benefit later -- but only as long as the society around you continues to honor the bargain. And if the society starts to show signs of being willing to dishonor the bargain whenever convenient, people will look differently at their willingness to give a lot of value NOW in exchange for the expectation of enjoyment of the reward LATER. Which may not prove convenient for the people who were enjoying soaking up that value NOW.

A "rich" person is someone who has stored up a lot of IOUs for the value he gave a while back. I guess that's why he's so hated: people see him as someone who's already given what he plans to give, and now expects people to live up to their promises to him.

Posted by: Texan99 at July 22, 2013 10:15 AM

It could be so much worse, mr rdr. You could be in IT :p

Posted by: Cass at July 22, 2013 10:15 AM

...but only as long as the society around you continues to honor the bargain.

That's right. You don't need an EMP to wipe out wealth; a government with power over you can wipe it out simply by inflating its currency and using eminent domain power to force you to sell stored wealth in exchange for money they've just printed for the purpose (or 'quantitatively eased' into existence).

There's still a problem with the old formula of 'figure out what you want, and then find a job that pays that way.' ~92% of people may be employed, but increasingly the jobs that they can find pay less well because they are part time instead of full time, or temporary instead of part time. That's also a consequence of government intervention: regulations that make it too expensive to hire full time workers because they regulate the terms for full time work beyond what the market will bear.

The government's plans to 'help the poor' are starting to run into each other. TANF requires people on it work at least 30 hours a week to get benefits, but if you work 30 hours a week your employer has to pay for Obamacare benefits for you. So now you can't work 30 hours a week, because your employer won't schedule you beyond 28.

The bargain for the working poor -- which is a substantial chunk of that ~92% -- is getting worse all the time. They can't earn as much money because their hours are cut; and they can't qualify for help because they aren't working enough hours.

And of course we are just about to engage in legalizing millions of workers to compete with them for these jobs, which will let them bring millions more family members along. I went to a big flea market recently, and there were signs promising immediate employment to anyone who would call, skilled or unskilled -- but the signs were all in Spanish, without an English word on them.

Posted by: Grim at July 22, 2013 11:15 AM

The cited academician and economist are the very products of following a dream – squaring the circle. I imagine the dashed expectations of the recently 'educated' will make for interesting times.

All I needed to know about wealth/money I learned from my parents (by example), Aesop (by the Grasshopper and the Ant), and Robert Heinlein:

"Throughout history, poverty is the normal condition of man. Advances which permit this norm to be exceeded — here and there, now and then — are the work of an extremely small minority, frequently despised, often condemned, and almost always opposed by all right-thinking people. Whenever this tiny minority is kept from creating, or (as sometimes happens) is driven out of a society, the people then slip back into abject poverty. This is known as “bad luck.”

As long as we keep sending our children to modern universities, modern universities will continue producing academicians, economists, and other dabblers in the arcane black arts. Life is learned elsewhere.

Posted by: George Pal at July 22, 2013 11:41 AM

There's still a problem with the old formula of 'figure out what you want, and then find a job that pays that way.' ~92% of people may be employed, but increasingly the jobs that they can find pay less well because they are part time instead of full time, or temporary instead of part time.

That's definitely true Grim, but on the other hand, as I've noted several times here, the costs of the essentials (food/clothing/shelter) have all gone way down over time. So we don't actually need to work as many hours to buy the same things.

Expectations have a great deal to do with whether people see themselves as "poor", "near-poor", or "struggling". I think our expectations wrt disposable income have suffered their own inflation. Also our list of needs, many of which used to be considered wants.

I think that's true of everyone, really. If the majority of couples now have 2 incomes, but they're both part time, that's still more than the 1 FT income that was common when I was growing up. And as you observe, benefits cut into wages but they also confer real benefits that would otherwise have to come out of wages.

To quote that complete moro... err.. incipient fascist Donald Rumsfeld, we're good at recognizing some things (the known knowns) and not so good at dealing with others (the unknown unknowns - those things we're not aware that we're not taking into account, but are nonetheless factors in the economy).

Posted by: Cass at July 22, 2013 12:26 PM

Speaking of the Grasshopper and the Ant:

A few weeks ago I went shopping for new books to take to my GrandPunks. I saw a book with a mouse as the main character and started reading it. Apparently it had won some kind of award and been lauded by no less a literary force than the NY Times.

So I open the book, and it begins with a bunch of field mice gathering seeds and grains in the summer sun against the certain prospect of a hard winter when food would be scarce.

"Oh goody!", I naively thought. "A remake of the Grasshopper and the Ant! - perfect!"

I continued reading.

The title character was goofing off while the other mice worked, and they called him on it. "I'm soaking up the summer sun - it will be dark once winter comes."

"Ooh... I can't wait to see him get his comeuppance!", naively thought the Princess to herself, mostly because she lacks the ability to think to other people. But tragically, the much-anticipated Teaching Moment was not to be.

The industrious mice labored away all summer whilst Our Hero lounged about, doing nothing productive that I could see. When asked why he wasn't helping, he always had an excuse: "I'm gathering sights/sounds/memories"....

"Good luck eating those, you nitwit!", the Princess thought uncharitably. So winter comes, the mice open their store of food and eat it all. Presumably Our Hero joined in the abundance he had done f**k-all to gather". Finally there are only a few crumbs left and the depressed mice turn to Our Hero: "OK, it's time to break out what you stored up all summer (whilst we were working our fannies of.... oh, nevermind).

So the lazy mouse starts telling them stories, and the moral of the story is that everyone contributes to the communal wellbeing in his/her own way, no form of contribution having any more or less worth than another.


Posted by: Cass at July 22, 2013 12:35 PM

I'm not sure "figuring out what you want and then finding a job that pays that much" was ever very good advice. Finding out what you can do that other people will pay for, and then adjusting your consumption to match, is a better approach.

When I was a waitress, I consumed as a waitress, and lived with other similarly impoverished young people in order to keep expenses down. When I became more productive, I put away waitress things. But I still lived within my income, which is an obligation that never goes away for long, whether you think of yourself as rich or poor, as blessed or cursed by the economy.

I had an uncle on one side and a great-uncle on the other who died in prison because they couldn't learn this lesson. Bitterly hard times for them, certainly, but their siblings all managed to figure it out.

Posted by: Texan99 at July 22, 2013 01:12 PM


The two are not mutually exclusive. In fact, it's optimal to do both.

As a waitress, you consumed as a waitress. But because you figured out that you would prefer consuming more, you did was was needed to find a job that paid more. And once that happened, only then did you consumed more but still within your income. But then, you figured out that you would prefer consuming more. And once again, you did what was needed to get a job that paid more.

And up and up the spiral goes until the utility of the next dollar isn't worth the effort needed to obtain it.

Posted by: Yu-Ain Gonnano at July 22, 2013 01:41 PM

I'm not sure "figuring out what you want and then finding a job that pays that much" was ever very good advice. Finding out what you can do that other people will pay for, and then adjusting your consumption to match, is a better approach.

I agree with Yu-Ain that you need to do both. One deals with your goals or strategy for the future, the other with how you deal with the present.

One of the conversations I recall very clearly with our sons was the "live your life according to your values". This includes knowing yourself well enough (for instance) to know what's important to you.

My youngest son was pretty straight about wanting a certain lifestyle (he wanted a nice home, and he doesn't like pinching pennies). He wasn't planning on having kids until later in life, and knew his wife would be working after they got married and probably after they have kids. I told him that there was a tradeoff associated with that lifestyle (pressure, long hours, putting up with certain things) and he was willing to pay that price. I'm very proud of him in that he has always lived well under his means - he's a big saver and always "pays himself first".

My older son planned on having a family right away, and also wanted a job that didn't require him to sit behind a desk every day. He chose a profession that "fit" the way he wants to live, but there's a tradeoff there, too - lower pay, and a lower standard of living.

I think they both chose appropriately, but there's always a price. I could easily be making twice what I make now, but hate consulting. It's not that I wouldn't be any good at it. I would. I just really, really dislike doing it and I'm paying that price every time I get my paycheck.

But it's worth it to me.

That said, everyone needs to adjust their lifestyle to their income. In fact, though we've always lived below our means, we're doing a lot of replanning this year and plan to cut our expenses even more so we'll be better placed to support ourselves and help our children and parents if the economy continues to tank.

Posted by: Cass at July 22, 2013 02:00 PM

The biggest lessons I'm trying to instill in the soon-to-be-high-school VES are:
Happiness is not in having all that you want, but in wanting everything you have.
And, chasing a dream is fine as long as you have a job that pays for the trip.
It's an on-going lesson in today's "consumer-addicted, gotta-have-the-latest-*fill-in the blank*" society. This is especially so for her given that she's moving into the largest target demographic for pretty much everything.

Posted by: DL Sly at July 22, 2013 04:24 PM

Honestly, that's never how I looked at it. I started out doing grunt work, because it was all I knew how to do that anyone needed doing. I received grunt wages. Naturally I was always looking around to see if there was something I could do that would pay higher wages. Whenever I found something that paid better, then and only then would I adjust my ambition to buy more goodies.

It goes without saying that I'd have loved to enjoy more goodies right from the start, but I didn't formulate an ideal level of goodies and then look for the job that would enable me to buy them. I just kept looking around for the job that would pay the most without requiring me to do anything I couldn't live with.

Posted by: Texan99 at July 22, 2013 06:00 PM

If I remember my spd rdr lore from many years ago, I think Mr rdr WAS in IT at one time (well, he sold computers for IBM or something like that), prior to or when he met his lovely wife and future mother of his children. Whereupon he went to law school and became the titan of jurisprudence he is today.

And that dude should be pushing 60 here, too, next August. Or maybe that's next year? Time flies.

To quote that other legal titan of our age "At this point, what difference does it make?"

Posted by: Don Brouhaha at July 22, 2013 06:04 PM

Responding to Tex's train of thought, I also don't think I ever had any version of this conversation with myself. I've always tried to do things that I wanted to do because they were honorable or worthy. How well I could do financially is something I've never given attention -- I figured I'd adjust to whatever it was. I've sometimes done well, and sometimes failed, but that was my guiding principle. I never thought to myself, "I'd like to have X, so I'll need a job that supports X."

Sometimes we've had very flush times, and sometimes very hard times. But in the hard times we've scraped by, and in the flush times we've saved and paid off debts from the hard times (figuring more hard times might come, as indeed it seems they always do). Someday I'll die, and that will all stop, and if I was having good times at the time there'll be something to pass on to my heirs (unless there's an EMP or bad governance). If not, they'll have learned something about how to take care of themselves and flourish as much as possible in a hard world.

Posted by: Grim at July 22, 2013 07:45 PM

[Decided to delete this comment]. It seems I struck a nerve without meaning to.

I'm often surprised, reading the comments, at what people seem to think I was saying. When that happens, sometimes it's just best not to say anything more.

If I offended, I did not intend to.

Posted by: Cass at July 22, 2013 08:37 PM

It's an on-going lesson in today's "consumer-addicted, gotta-have-the-latest-*fill-in the blank*" society. This is especially so for her given that she's moving into the largest target demographic for pretty much everything.

That's very hard for a lot of kids (and parents, too), but from what I've seen you're doing a wonderful job :)

Posted by: Cass at July 22, 2013 08:59 PM

I read your comment before you deleted it, Cass. I wasn't offended, though perhaps others were. We see things very differently, but that's just why we have been friends. I value the difference, and want to know what you think. The force of my comment was merely to endorse Tex's position that, finally, I simply had never approached things in the same way. That's not to say that you're wrong; it's just to say that, like her, your road never occurred to me.

Posted by: Grim at July 22, 2013 11:46 PM


I don't think it's necessary to formulate an ideal level of goodies per se. But there did seem to be an understanding that the current level of goodies was insufficient. And that this situation needed to be improved upon and so you set upon doing what was needed to improve it.

It's the difference between being proactive and reactive. Both need to live within their means, just as you stated.

Posted by: Yu-Ain Gonnano at July 23, 2013 09:08 AM

The point I tried to make in my deleted comment is that earnings don't just determine how many goodies you can buy.

They also determine what you can afford to do for yourself and for those you care about. If you have a family, this is not an insignificant point.

I don't think either one of my kids had a goody list that determined their choice of career. One went from two incomes to only one so one parent could be at home when their children were small. They have fewer goodies, but more time for both parents with their children.

The other figured out a way for both of them to have a satisfying career (which was very important to his wife) and still have a family. That requires more income, as there's an efficiency tradeoff involved in not expecting the woman to stay home with the kids. To them, it's worth it (as it was to my brother and his wife, who have raised two absolutely wonderful children).

I think it makes sense to decide what's most important in life, and let other major decisions (get married? go to college? move to another city? live in a rural area? have kids?) follow from that. Living within one's means is mandatory regardless of the decisions made.

Posted by: Cass at July 23, 2013 09:28 AM

And that makes perfect sense. I was just using "goodies" as shorthand for whatever it is one finds desireable. If one parent staying home with the kids is desireable, then that is a "goody" and plans should be made to do what is needed to obtain it, whether that be a better job or foregoing other expenses.

Posted by: Yu-Ain Gonnano at July 23, 2013 11:41 AM

I guess I think of "goodies" as tangible, material things.

One of the things money can do is give a person more options and freedom. If there are 10 options out there but you can only afford one of them, you don't really have a meaningful ability to choose (assuming you need to act now and can't instantly increase your income).

Thanks for the clarification.

Posted by: Cass at July 23, 2013 01:25 PM