In 1966 I was a junior high kid in small-town Montana when I got my first – and maybe most important – lesson in economics and personal finance.
That year was a whirlwind of change for me. I had just left city life in the projects with my welfare mom to live with my dad, a hard-working small-business owner. Everything was new – the small-town culture where people are accepting but demand responsibility; the freedom and fresh air walking through the woods and fishing in the beautiful mountain streams; the first exposure to the working world where one gets only what he earns; the little family luxuries like having clean clothes to wear and breakfast on the table every day.
But back to my economics lesson.
I didn’t know it at the time, but the crabby old guy who owned the local drug store was actually on a one-man mission to teach economic responsibility to the local youth. Allen’s Drug Store featured an old-fashioned soda fountain, and old-man Allen served up a world-class hot fudge sundae: whipped cream, nuts, and a cherry on top. For a quarter!
Like most small-town kids at the time, I was doing odd jobs and making a buck here and there. I also got an allowance of fifty cents per week, which seemed like a fortune to me. A quarter for a hot fudge sundae at the drug store was well spent, and I had bought a few for cash before I learned from my older sister that Mr. Allen would actually let you “charge” the cost of a sundae, and you could pay him later.
I ran right down to Allen’s and ordered up my hot fudge sundae. “Can I charge it?” I asked. “Sure,” Mr. Allen said. I felt like a big shot.
The next day I was back at the drug store, charging another sundae. It just doesn’t get better than this! And within another day or so I was back again. And again.
One day Mr. Allen went to his little box of index cards, picked out mine, and saw that I owed him for a half-dozen sundaes. “I’m afraid this is the last one, until you pay your bill,” he said. I was a little bit ticked off, because I had already spent all my money on Mad magazines, baseball cards, and other important stuff. But then I started thinking about the whole “charge account” thing, and it started to make sense. Mr. Allen couldn’t just give me free sundaes forever. And I couldn’t eat sundaes every day when I was only bringing in fifty cents a week.
So I went without sundaes for a while and saved enough money to pay my bill. My sundae consumption went way down. I found that they actually tasted a lot better on the rare occasion when I decided to buy one – for cash.
Thanks for the lesson, Mr. Allen.
Today the nation of Greece defaulted on its IMF loans. Banks put limits on withdrawals. Stock markets tumbled worldwide. It’s not that Greece’s economic collapse is, on its own, that big a deal – their GDP is only about equal to that of Louisiana. What really scares thoughtful people is that other European nations – and the United States, the world’s largest economy – are following the same path as the Greeks.
Even junior high kids can understand that spending more than one earns is a recipe for disaster. Our Federal Reserve, and the European central banks, held interest rates to zero for many years so that our governments could borrow and spend (pandering for votes) to the point that repayment of the debt is metaphysically impossible. In addition to the federal insolvency, local and state governments have promised pensions and benefits to their employees (again, pandering for votes and union support) that citizens will never be able to afford.
It is embarrassingly simple. If we don’t elect conservative officials with at least junior-high level economic skills, and if we don’t allow them to restrict government growth and spending, there will be no more hot fudge sundaes. Try telling that to your grandkids.
Boehner and McConnell have to go. So do the many representatives whose sole interest is holding on to their positions and power. Our only hope is to support and grow the Freedom Caucus, Congress’ conservative wing and the only antidote to the liberal Republican leadership. And we must elect a president who understands economic reality. At least at the junior-high level.
Tom Balek – Rockin’ On the Right Side
Got to pay your dues
If you wanna sing the blues,
And you know it don’t come easy!
A fun little romp with George and Ringo!