The economy is "booming"? Maybe not.

I don’t know about the US but here in the UK we often have both adults in a family working full-time low-paid jobs (there are over a million unemployed which keeps wages low - never mind the unemployed disguised as being sick, despite ATOS) just to keep their heads above water and saving money can be very difficult. It’s expensive being poor: you can’t afford good quality clothing which lasts longer and is therefore cheaper in the long run, your utilities run on meters which charge more, you may need to use payday loan companies (ditto), junk food is cheaper and fills bellies and you may well be too tired to cook after a long day at your job and then your second job. And so on.

Sure, that’s definitely a common scenario in the U.S. too, plus we have atrocious health care costs & insurance premiums as frosting on the shit cupcake. Oh, and mind boggling college debt, which traps workers geographically and causes enormous financial and economic problems.

I have read about the supposed “spend! buy!” mentality for years, and I know lots of people who earn decent money who barely scrape paycheck to paycheck. Exactly zero subscribe to that consumerist mentality - they’re not scraping by AND buying tons of fancy shoes or whatever. They’re scraping by due to the myriad negative factors mentioned above (including the U.K. post right above mine) and frankly, it’s disheartening and insulting to keep reading drivel about how “all Americans buy too much stuff” and “anyone without savings has poor money management skills, full stop” when the consequences of crippling college debt and/or medical costs isn’t exactly a cryptic mystery.

Just so. This was part of my original point (not well stated), that the economy is not booming and we have only to look at how many people are barely getting by - as evinced by that $400 statistic. Yes, there are many, many acquisitive folks out there who don’t manage their money well, and social pressures lead to that overspending/undersaving dynamic. But lots of people just don’t have enough to handle anything but the very barest of necessities. The expression that the U.S. is a “land of plenty” does not apply to many, many people, and that says to me that the notion that the economy is just happily percolating along is a tragic misconception.

I don’t know the data, but it does certainly seem like there’s a perfect storm brewing that consists of rising costs associated with an aging population, and rising debts among young adults who invest in their education and training costs. Young adults are also compounding these mistakes by turning to high interest bearing debt to get by during lean times. What we’re headed for is a time when the elderly will outlive their savings and people under the age of 50 won’t produce enough income to give us a healthy tax base.

This is why before we can talk about anything like medicare for all, free college, minimum income guarantees and whatever, fair taxation and capitalism’s imbalances have to be addressed and fixed. But I fear it won’t because talking about taxation is like talking about how to read hieroglyphs for your average Dancing With the Stars-watching moron sitting at home. The imbalances of taxation represent the economic and power disparities in our system. What comes next are more brazen attempts to remind the rest of us that we’re essentially disposable.

  1. It’s reckoned that if people married randomly, rather than marrying those with a similar income and educational level, the gini coefficient of the US would be 0.34 instead of 0.43. The growth of inequality is likely the result of women’s rights being a success and a shrinking wage gap.

  2. Most people who don’t have $400 to spend for an emergency are bad with money. It’s not an issue that they couldn’t have that money, it’s that they’ve chosen to not have that money. Put two dollars away every day for 7 months and you have $400 in savings; find a group of friends to get an apartment with, and shrink your rent by 3/4ths, instead of living by yourself because you can just barely afford to do so; etc. Taking money away from the wealthy to fight income inequality does make sense from a macroeconomic and social sense, but giving that money to the poor wouldn’t put money into their savings, it would just get wasted. Taxed money for social care is better spent going directly to hospital care, vocation training, food stamps, etc. You have to restrict the use of the money to limited, reasonable, and productive purposes.

60%+ of people just can’t save a dollar or budget to save their lives. Giving them more money doesn’t change that, it just gives money to Vegas and thereby the mafia.

Let’s consider why people, particularly low-income and younger people, might have less income today than they did a generation ago:

  1. Housing costs have rising faster than household income - by some.

https://www.apartmentlist.com/rentonomics/rent-growth-since-1960/

  1. Costs of education (and presumably career training) have also increased - by some - relative to income:

People essentially have the same amount of money, but two major factors that impact entry into the middle class have declined significantly.

What hasn’t declined? Disparities in salary and wealth at the very top echelons of society.

In the 1950s, executives made 20 times what the average worker made; now he makes 360 times what an average worker makes. Consider, too, that the top 1% of all people who about 45% of this country’s wealth.

But that’s not really the most telling statistic; the most telling stat is that for the bottom 50% of this country, mean net worth dropped from $30,000 to just over $10,000 between 2007 and 2013.

https://en.wikipedia.org/wiki/Wealth_inequality_in_the_United_States#/media/File:Wealth_inequality_panel_-_v1.png

Maybe that’s why half this country is “so bad with money” – they simply don’t have any. We might not necessarily see it, but the Great Recession absolutely crushed millions and millions of people financially in this country.

Some of the things you mention (e.g. payday loans) are living beyond one’s means.

People have always been bad with money. That ain’t new.

Everything else you wrote had nothing to do with anything. Not only did I not deny the growth of income inequality, I said that it’s a thing, explained why it is occurring, and I encouraged fighting it by taxing the wealthy. Giving me a list of examples of how income inequality is so too a thing and bad for society is not of large value given that I also said that it is so too a thing and bad for society.

The consumer economy is fueled by people who are bad with money. That’s one reason economic problems related to consumption can snowball quickly.

How much would they have saved if the economy weren’t booming - more, or less?

The US is a land of plenty. Some people are still bad at managing their money, and how the economy is doing doesn’t change that.

Regards,
Shodan

It’s not just income inequality that I was talking about. If the bottom half of American adults had an average net worth of $30,000, there would still be inequality, but even among the lower end of the economic spectrum, the average person would be much better off than they were 10 years ago – like 3 times better off.

We’re not talking about the bottom ten percent, or the bottom quintile or even the bottom quarter; this the bottom 50% of working-age people in this country who, already relatively poor, have about 1/3 of what they had a decade before. If you’re just getting by, losing 2/3 means that there’s a good chance that many of those who were just getting by are probably on their way to homelessness and destitution. Once people are stripped of their most basic needs, whether they’re good with money or not no longer matters; it’s a game of basic survival that point.

Could you please expound on this or provide a cite to back it up?

I don’t know if the number is 60%, but there is a sizable percentage of folks who have no idea how to save money. Instead of a UBI, perhaps we would be better served paying health insurance premiums and a monthly food stamp allowance for each American.

Cite?

Ah, there’s an insight! So if someone is poor, it’s their own damn fault, amirite? You wouldn’t by any chance be of a Republican inclination, would you? :wink:

Yes, the US is a land of plenty – plenty of natural resources, plenty of land, plenty of money. That’s not the issue. The issue is the extent of how lopsided the distribution of national wealth is compared to other similar societies. Which is why when independent analysts rank the US relative to other first-world countries on important socioeconomic metrics like income inequality, income security, poverty, crime, general level of happiness, and general population health, the US invariably gets a shitty ranking far down on the list.

https://www.nber.org/papers/w19829
https://en.wikipedia.org/wiki/National_Bureau_of_Economic_Research

Well, for example, there’s the high levels of credit card debt and impulse buying among US consumers:

Consumer culture is constantly trying to get us to pay more attention to how much we want something than whether we can afford it. Yes, I think it’s fair to say that consumerism encourages financial irresponsibility and vice versa.

Right. When normal life needs such as health care, education, and elder care have a high probability of landing a household with crippling levels of debt, then we can’t just dismiss worrying trends in household finances as merely individual instances of people being “bad at managing their money”.

While that is true and that is an interesting point, I’m not sure that the thrust of your argument is correct.

For example, I just sent my girlfriend a picture the other day of the egg section at the supermarket, commenting, “Pre-cracked eggs for people too lazy to crack their own eggs”:

Imagine if the money that went into the R&D for shell-free eggs had gone into solid-state battery research. Which is actually better for the economy over the long-run?

The general trend of consumerist spending is on cheap thrills and short-term solutions. To be sure, sometimes it leads to something like the smart phone and that’s desirable by all means, but more often it’s Vegas and pre-cracked eggs.

Whereas, the general trend of investor and government spending is on things that advance the state of technology, so that the more real quality of life - not having to work in the coal mines, not having to work 100 hours per week, etc. - are improved.

Consumerism has its place, but in a country with pre-cracked eggs and an average BMI of 26.5, I think it’s fair to say that we’re over the recommended dosage at the moment.

Probably. I also quite like the idea of Sweden’s “club activity funding” initiative:

https://en.wikipedia.org/wiki/Sverok

It keeps people healthy, active, and social instead of sitting at home, watching TV and getting fat. But, note, you’re not forced to go outside and be social, it’s just cheaper to go do things with a local club.

It’s not “simply” that, so I don’t think you need to accept that. Obviously one needs income in order to save any of it. And wealth and income do correlate.* But unless one is at the very extreme, there are always better or worse savers with more or less income. Ability to save goes up as income goes up, but so does ability to spend. Hell I consider myself a good saver. But I make 5x what I did 10 years ago and didn’t put that all into savings. Nowhere close. Many of us have coworkers or relatives who struggle financially when we are not or did not, and those anecdotes color perception.

In order for emergency savings to be useful as an indicator, we need to understand how it changes with changes to income, other economic indicators, time, and with human behavior. And I just don’t think we have enough data to get much use out of a one-time or occasional survey like this.