Demanding Dependency

I used to sort of like U.S. News & World Report when I was younger. My Dad has subscribed to it for at least three decades. Like all weekly news magazines, it was filled with lots of crap, but it also had some interesting articles. I eventually stopped my occasional reading of the magazine with the advent of the Internet and the ability to gather information from a broad variety of sources.

Yesterday Mom sent me home with her most recently received edition of U.S. News because she has little interest in reading it. I thought I’d flip through the pages before tossing it into the recycling bin. I came upon this whiny article about Gen-Xers being unable to maintain their parents’ standard of living.

In the article, Author Kimberly Palmer interviews Nan Mooney, the author of the book (Not) Keeping Up With Our Parents. The book’s subtitle is “The Decline of the Professional Middle Class.” Mooney makes some important observations about Americans’ financial habits. Increasing tuition costs means that it takes longer to recoup the cost of college (if it is ever recouped) and that people spend more years repaying their student loans. But the real problem is where our money is going. Palmer writes:

“The share of family income devoted to fixed expenses like rent, [Mooney] notes, has increased from 53 to 75 percent in the past two decades. Housing prices in most major metropolitan areas have risen six times faster than household incomes, and household debt has ballooned to over 130 percent of disposable income.”

Mooney whines, “I certainly thought I'd be in a financial position to consider having children. Instead, at 36, I was living with a roommate in New York, barely able to cover even the basics.” She has been forced to move back in with her parents in Seattle to make ends meet. Later in the interview Mooney slides in the fact that she is a single mother.

It is very hard to be a single parent. I would not wish this condition on anyone. Statistics show that this is more of a sure path to poverty than almost any other single factor. We are not privy to the reasons Mooney ended up being a single parent or why (or whether) her child’s father contributes materially.

On average, housing costs per family have increased substantially over the past two decades. But Mooney’s focus on metropolitan areas skews the facts. Housing costs far more in densely populated areas than anywhere else due to demand and due to stifling regulations that try to impose rent fairness via bureaucracy. Mooney should not whine about the cost of her decision to live and work in downtown New York — one of the most expensive spots on earth. Other options are available.

In terms of constant dollars, housing generally costs about as much per square foot as it did three decades ago. But Americans have significantly increased the number of square feet of dwelling space per person. We all seem to want to live in much larger houses than our parents did. But another major contributing factor is the increase in rates of divorce and single parent households. The average houshold consists of far fewer occupants than a generation ago. The upshot is that we spend a greater portion of our income on housing than our parents did.

Mooney contends that “Consumer spending hasn't risen since the 1970s,” but that fixed expenses have risen dramatically. But not all of those fixed expenses go to housing and medical costs. Mooney completely ignores the substantial rise over the past two decades in the percentage of household income that goes to taxes (at all levels). Mooney also hammers on the myth of stagnant incomes, which U.S. News itself has debunked.

We are not told what kind of degree Mooney has. But it would not be unreasonable to assume that it is an English Lit degree. Over the span of a career, the average English Lit grad barely garners enough income over that of the average high school grad to cover the cost of college. It seems more than likely that Mooney’s economic situation stems chiefly from her own choices about education, career, marriage, child bearing, and location.

Fortunately, Mooney offers some good advice that all of us should follow. “Understand your financial obligations, from mortgages to credit card payments. Opt for the simplest financing options. Take steps to [make] your children financially literate.” Too many kids hit the age where they begin receiving credit card offers without having any clear understanding of how to manage their personal finances.

Mooney also suggests that we separate ourselves from materialism. “Most important, don't buy into the "you are what you make" value system.” Unfortunately, for Mooney this does not appear to mean working to become more self-reliant, but rather, sponging off of others.

The final solutions Mooney offers show that she was educated as a writer, not as an economist. “As intelligent, articulate members of the political system, we are in a position to demand more federal support for education, housing, child care, healthcare, and retirement.” Implementing these suggestions would exacerbate rather than reduce the problems she discusses. Increased taxes would further increase fixed expenses.

With all of the poor professionals that Mooney writes about, who does she think is going to foot the bill for all of the federal largesse that she says we should demand? The people that didn’t attend college? Oh, of course not. Mooney must be talking about “the rich,” which likely includes people like her parents and anyone that has more than $20K in their 401k plan.

So, let’s reword that last sentence I quoted from Mooney to say what she really means. “As people with political power, we are in a position to forcibly take money from other Americans that we classify as rich to pay for our education, housing, child care, healthcare, and retirement.” Mooney seems to truly believe that we can tax ourselves into prosperity and that stealing from others to pay for our wants is completely justifiable. Indeed she calls it “a moral issue about the shifting values of a country where a staggering number of people cannot manage to get by.”

Cannot? Cannot get by doing what? Spending more than they make? Expecting a far more opulent lifestyle than their incomes warrant? There are plenty of ways to live providently and frugally. Even the fixed expenses Mooney discusses are far more flexible than she implies. It just requires a goodly portion of self discipline — something that seems in short supply in our society.

Ms. Mooney seems to be pretty sour about her lot in life. Apparently she totally discounts her own choices with respect to her current fate. She offers some good advice about personal finances, although, it would appear that she hasn’t followed much of it. But her contention that we can achieve happiness by taking from others and increasing dependency is more than farcical; it’s diabolical.