Today's Opinions, Tomorrow's Reality
Yawning Toward Disaster
By David G. Young
Washington DC, September 2, 2008 --
Americans' complete lack of interest in considering their profligate ways spells bad news for the country's financial future.
When billionaire investor Warren Buffet's remarks were simulcast to theaters around the country two weeks ago1, it was a potentially decisive time for America's looming financial crisis. After decades of sticking their heads in the sand over runaway spending and mushrooming entitlement programs, the general public had finally been presented the problem in terms they could understand -- in the form of a glitzy big budget Hollywood picture.
The new documentary, I.O.U.S.A, entered general release a week ago Friday, aspiring to galvanize efforts to solve the problem of America's looming debt crisis much the same way that Al Gore's An Inconvenient Truth served to inspire a response to global warming. But the question remained -- can a movie really succeed in energizing the yawn-inducing topics such as inflation and monetary policy?
If the audience at my local theater is any measure, then the answer is a resounding "no." Upon walking into a stadium-style cineplex on Friday night just as the movie started, I counted just two other people present. By the time the lights came on at the end, there were eight others seated in the nearly empty theater. And this was no regular theater -- it was film's the closest venue to the city limits of Washington, DC. The capital has the wonkiest population in the country, and an ideal target market of professionals oriented toward economics and politics. If the film were ever to receive a warm reception, this was the place.
Sadly, the film has failed at the box office. One week after opening night, it was ranked 34 in the country and had only earned $658,890 in box office receipts.2 Only 18 theaters nationwide presented the film at the end of its first week.3 Compare this to An Inconvenient Truth, which grossed over $24 million in 587 theaters around the country.4
None of this should reflect badly on those who made the film, which truly does a magnificent job of presenting extremely dry topics in an accurate, engaging, and entertaining manner. The movie's failure to resonate with the public just proves that people really, really hate economics. I have a long running joke with an old college pal that the absolute worst way to pick up a girl at a party is to strike up a conversation about inflation.
And the film is true to the joke. The movie features ample talk about inflation -- that America's government budget deficits, runaway Medicare and Social Security spending, and international trade deficit are eroding the value of the American Dollar. A college activist featured in the film desperately approaches passers by with pamphlets on the country's financial troubles. A young lady brushes him off, much the same way moviegoers are brushing off I.O.U.S.A.
This is terrible news for America's financial future. If a glitzy Hollywood picture can't proactively get Americans' attention, what can?
The several financial issues addressed in the film are actually manifestations of a single core problem: Americans irresponsibly spend way too much money. When they do so in their private lives -- mortgaging enormous new homes, buying gigantic new SUVs on credit, and filling their homes with East Asian consumer gadgets by charging them on plastic -- it should be no surprise when their elected representatives behave the same way with the government.
This has gone on for so long that people have come to think of it as normal behavior. But it's not. I remember a sudden outburst by my normally apolitical 95-year-old grandmother who survived the Great Depression. After listening to her adult children whine about the pain of the mild 2001 recession, she shouted, "You people don't know what you're talking about!" She noted with dismay that whenever her children wanted anything, they'd just go out and buy it. "That's not the way it used to be," she said.
Indeed. But that's the way it will be again in the future. Americans are so overextended on credit -- both in private and in the public sector -- that a day of reckoning will inevitably come where people will not be able to continue their profligate behavior. This might not be such a bad thing, except that the economy has become so dependent on this spending that a crisis-based correction to the problem could push the country into a severe depression. Re-calibrating the economy to match a rational level of both consumer spending and public outlays will take time.
The collective yawn with which America has greeted I.O.U.S.A. may mean there is no way to avoid a hard landing with an economic depression as a means of fixing the problem. Whether the terminal crisis comes in one year or twenty years is hard to say. By the time Americans finally wake up to the consequences of their irresponsible behavior, it will be too late to stop the disaster.
Related Web Columns:
Tyranny of the Irresponsible, March 18, 2008
House of Cards
Victimized by an Idiotic Mob, October 2, 2007
Spending Away the Dollar, December 7, 2004
Mugged by Grandma, July 9, 2003
1. Reuters, Buffett, Others Say High U.S. Debt Levels Pose Risks, August 22, 2008
2. The Numbers.com, The Top Movies of Thursday, August 28, 2008, August 28, 2008
4. Box Office Mojo, Documentary Movies, as posted September 1, 2008