Good Lessons in Bad Times
by Senator Brent Hill
July 3, 2010
Economic hard times are never pleasant. In fact, for those who are caught unprepared, they can be devastating. Yet, as with other difficult times in our lives, this can be a time to learn and to better prepare for the next fiscal crisis that will inevitably come.
Economists are in agreement that our current economic recession is the direct result of government and personal excesses. Families purchased homes that their incomes could not justify, counting on rising real estate prices to build equity. Financial institutions were eager to maximize profits with subprime loans at high interest rates. Consumer debt, consisting of credit cards and loans on cars, boats, trailers, vacations, etc., rose to a staggering $2.5 trillion in 2009, representing nearly $8,100 of debt for every person in the United States. But even that pales compared to the $13 trillion our federal government has overspent. While most Americans are now trying to pay off credit cards and other consumer loans, our government continues to add $3.82 billion to our national debt every day.
In contrast to the federal spending machine, most American citizens are learning important lessons from these bad economic times. Undoubtedly, the following lessons have been taught to us before, but trials in life have a way of driving their importance home.
- Education is a key to success. The demand on our community colleges and universities has exploded as unemployed and underemployed individuals again realize that good jobs require a good education. Our nation has been transformed from a manufacturing-based economy to an economy based on knowledge, and education serves as the gateway to better options and more opportunities.
- Self-reliance leads to happiness. Following the Great Depression, President Franklin D. Roosevelt said, "Those dark days will be worth all they cost us if they teach us that our true destiny is not to be ministered unto but to minister to ourselves and to our fellowmen." Those who have turned to government to bail them out of these difficult times have repeatedly been disappointed and disillusioned. They have discovered that government does not make a good parent. Responsible parents teach their children self-reliance and self-determination, knowing that failure to do so will result in selfishness, dependence and loss of self-respect.
- Debt results in bondage. The weight of financial burdens will crush our freedoms as effectively as any other enemy. Our country now finds itself indebted to communist regimes and totalitarian governments. In our own lives, indebtedness can be a ruthless enemy that threatens our security, our futures and our peace of mind. Each expenditure we make should be examined in light of (a) the benefit, (b) the cost and (c) our ability to pay for it. All the justification in the world will not make the payments for us.
- Today's planning secures the future. Most financial goals—college, a home, travel or retirement—necessitate advance planning; they require us to save and the only way to save is to spend less than we make. That is possible only if we discipline ourselves to prioritize our needs and curtail our wants. Participation in college savings plans, employer-provided pensions, and personal savings programs will provide security and peace of mind not found in temporary material gratification.
- Financial crises will come again. Whether it's a worldwide recession or a personal financial emergency, unexpected setbacks are a part of this life. Those who prepare well may be hurt, but they will survive. Those who lose their jobs will find other employment if they are well-educated. Those who invest prudently will recover. Those who avoid debt will meet their obligations. Those who purchase modest homes will continue to be sheltered. Those who store away food and other necessities will not go hungry. Those who have learned to take care of themselves will triumph.
We will come out of this recession with more efficient state and local governments, more innovative classrooms, better-managed businesses and stronger households. But to avoid repeating our mistakes of the past, we must not forget the lessons this economic crisis has taught us.