Atlas Shrugged: The Mocking

Friday, January 15, 2010

Standards of Living

Did you know that the quality of your life is determined by how many consumer goods you own? It's quite true. Megan McArdle, the economics blogger of The Atlantic, said so.

I don't want to sound as if I'm saying Britain's a terrible place--it's lovely, and I miss it. But the amount that people are able to consume is much less than the amount Americans are able to consume, and many of the things they forego make real difference in things like personal comfort.

Some people think rising income inequality is a problem, but as long as the American consumer can buy consumer goods, the poor are just lucky duckies with slightly smaller tvs.

I broadly agree with Will [Wilkinson] that consumption inequality, not income inequality, is what matters. If the rich have access to broad classes of goods that the poor can't have, I find this worrying. On the other hand, if the problem is that Bill Gates has a really awesome 80 inch flat panel television, while the poor have to be content with a 32 inch CRT, well, I can't say my heartstrings are plucked very tight by this injustice. So it's important to know what the real differences are.

This theory was very popular with conservatives and libertarians over the last few years; I'm sure I referenced it myself. But of course, as Ezra points out, some of that consumption inequality may well have been due to rising credit inequality: people borrowed money from their houses to buy consumption goods.

But I think it's easy to overstate the contribution of debt, for two reasons. First, many of the discussions on consumption equality focus on the poor, who were still relatively credit constrained even at the height of the bubble. And second, income inequality figures exclude both taxes and government benefits. Things like the EITC and Section 8 vouchers really have made a quite substantial improvement in the ability of the poor to consume.

So I don't think we actually know how much of a difference consumer credit made to equalizing consumption between rich and poor. I suspect that the continued mechanization of formerly labor-intensive tasks has made a greater difference, but then you'd expect me to say that. The data we want will not be available for several years, especially since period immediately following the financial crisis will be very atypical*, and therefore not useful in assessing the longer term trend.

Because America is the land of consumption and the ability to buy consumer goods is a gauge of our personal worth, America is better than socialist Europe. Everything depends on our money and credit and what we can buy with it.

We're the children of the middle class. And ever more, a clean credit report, a good FICO score, are the standards of a life well lived.

McArdle lives in horror of being unable to buy things.

While I was buying the iPhone, they pulled me aside for a credit review. Since I have good credit, this was shocking--and humiliating. For a middle class American, telling your two friends in the store that the AT&T folks are having second thoughts about giving you credit feels a little like confessing that you're a criminal. This is even though I know plenty of journalists with bad credit, the vicissitudes of the industry being what they are. I found myself earnestly protesting to the store clerk that seriously, I really do pay my bills on time, and I don't run a credit card balance.

It turns out they just wanted to look at the activity on my account, since I've just applied for a car loan, and bought a Verizon broadband modem. But in a way, it's a reminder of just how obsessed our society has become with borrowing money. The worst thing that happens to you if you borrow too much money is--it gets hard to borrow still more money. Yet during the recent financial crisis, commentators refer to bankruptcy, or foreclosure, as something akin dying of cancer, rather than losing your credit cards and moving to a rental flat. This may be because we so often confuse credit rating with moral virtue: good people have good credit, and bad people . . . well, best not say the "B" word out loud, lest the dread disease should spread to you.

I can't say that I've noticed that a good credit report is an obvious testimony to sterling character. I've known plenty of people with A+ ratings who I wouldn't trust to take care of my goldfish. And I don't even have a goldfish.

Of course there are irresponsible profligates who borrow money they've no intention of repaying. But most of the people I know with awful credit histories have rather more understandable explanations: a divorce. An unexpected illness. Trouble finding a job when they emerged from graduate school with hefty loans. Freelance jobs that took too long to pay--or went bust without reimbursing sizeable expenses.

The worst part is that the profligates are immune to the shame (or seem to be). It's the decent people, the ones who were overtaken by events, who cringe when the store clerks motion them aside.

You see, once upon a time McArdle herself was unable to buy things. She had trouble finding a job when she emerged from graduate school with hefty loans.

But that doesn't mean I don't understand how awful and terrifying it is to have expected a certain life, and have it stolen away from you by a fate you do not very well control. In June 2001 when I graduated from business school, I had a management consulting gig that was scheduled to pay over $100,000 a year and had just moved back to New York. Two months later, two planes crashed into the World Trade Center, killing a number of people I knew and leaving the rest of us traumatized. Four days after that, I was working at the World Trade Center disaster recovery site, trying to come to grips with what had happened. Four months after that, the consulting firm, having pushed back my start date twice, called my associate class and told all of us that our services would not be required.

For the next eighteen months, I struggled to find a job, in the teeth of a recession that kicked MBAs especially hard. It was awful in a way that is difficult to describe to anyone who hasn't been unemployed long term; the thing makes you question everything about your life. I remember going to see Avenue Q on a date, and writhing in humiliation, thinking that my date must be identifying me with the aimless failures on stage. I was 29 years old, and living at home. I had money--I always managed to work. But as far as I could tell, I had no future.

When I finally did get a job, with The Economist, it paid about a third of what I'd been expecting as a consultant. I had about a thousand dollars in loan payments, and of course, I had to live in New York, where my job was. For the first time in my life, I understood what Victorian novelists meant when they described someone as "shabby". Over the years since I'd had a steady income, my clothes had stretched out of shape, ripped, become stained, gone out of style. I couldn't afford new ones. And I wasn't one of those whizzy heroines who can make over her own clothes. Instead, I frumped around in clothes that never looked quite right, and felt the way my clothes looked.

It took me a long, long time to crawl out of that hole. I'll never make what I expected to make as a consultant. I'll never have the job security that I had learned to expect in the pre-9/11 world. The universe will always seem a potentially malevolent place to me, ready to unleash some unknown disaster at any moment.

And as God is her witness, Miss Scarlet will never be without material possessions again. But McArdle didn't always feel this way.

Many of the things on the list [of privileges of wealth] have nothing to do with "privilege", and in fact, I didn't get them, because my parents poured pretty much all of their disposable income into educating me: vacations, for example. Many of the other things on that checklist--getting a new car from your parents, going on a cruise with your family, having a television in your room--were rare among my ultra-privileged private school classmates because they were seen as vulgar; not having those things was a sign of higher social class. (I think some of that's changed now, though, from what I gather, not the disdain for cruise ships.) This list reeks of academics confusing their petit-bourgeois disdain of ostentation with actual privilege. Having a television in your own room is a sign of poverty mostly to the less well remunerated castes of the lower-middle class, who always feel they should be pouring the money into something more worthy; it is not an uncommon sight among welfare families in New York City.

Vacations with hotels are an even less reliable indicator of "privilege". Aside from a youthful trip to Niagara Falls, I can't remember any family vacation that did not involve visiting relatives, or did involve an airline flight. I can think of no way in which this hampered my development as a fully actualized human being, or an economically productive member of society; nor do I think that the fact that I have not been to Disneyland1 materially affected my chances at Harvard2. I'm a child of privilege not because my family gave me fantastic leisure opportunities, but because the circumstances of my birth and upbringing made it relatively easy for me to choose my path in life. Every one of those professors' kids is more privileged, in that sense, than the child of the median car-dealership owner.

McArdle went, as she has said several times, to a prep school that cost $38,000 a year. Those extremely wealthy students were not modest about their wealth either, and McArdle, as she says, was not in their economic class.

I went to school with a fair sample of the most obnoxiously rich people in the country.

As a teen, we can only guess what being one of the poorer of the rich kids did to her social position in her school. She has stated that being the tallest girl around was difficult and dealing with students who unthinkingly lived a lifestyle that McArdle couldn't compete with must have been difficult as well. We know exactly how she felt about being poorer than her social circle as an adult because she tells us.

[Writers] spend their twenties, and often their thirties, living paycheck to paycheck. They are extremely well educated, and all that education is not only expensive, but builds expensive habits. You end up with a lot of friends who make much more money than you--who don't even realize that a dinner with $10 entrees and a bottle of wine is an expensive treat, not a cheap outing to catch up on old times. Our business is in crisis, and we lose jobs often. When we do, it's catastrophic.

This is what David Brooks calls "status-income disequilibrium", and unless you are among that happy breed of writers who is married to someone with a high-paying job, or who has a trust fund, you feel it keenly. Everyone you write about makes more than you. Most of the people you know make more than you. And you come to feel that shopping at the farmer's market, travelling to Europe, drinking good coffee, are minimum necessities. Your house is small, your furniture is shabby, and you can't even really afford to shop at Whole Foods. Yet you're at the top of your field, working for one of the world's top media outlets. This can't be so.

So you insist on an elite lifestyle that is affordable. You buy expensive salt and read Gourmet, buy the biggest tv, buy clothing from the right stores and catalogues. You swallow the corporate propaganda that buying yet more consumer crap will make you one of the elite. You believe that as long as you can go shopping like the elite that you are one of them. Because somehow, somewhere, you have to still the nagging voices inside that say the rich kids really are better, that your education was wasted on a low-paying career, and that your parents sacrificed everything for you (and said so repeatedly) for absolutely nothing.

And you say that the American standard of living is much better than Europe's despite any evidence to the contrary, because to you, human beings are nothing but consumers to be exploited for personal profit, and whoever does the most shopping wins.


Clever Pseudonym said...

You'd think having invented steamed carrots would make Megan worth a lot more financially than she claims.

I do sympathize with how difficult it must have been to live with her parents on the Upper East (West?) Side while having to suffer the unbearable hardship of not being able to wear the latest desginer fashions while attending a Broadway show. I'm surprised nobody established a foundation to assist with her travails.

How sad that she feared her date made assumptions about her being an "aimless failure" for being unemployed. What kind of company must she keep that make such prevailing judgement? Most people I know are rather sympathetic, sometimes even helpful, to people who struggle with long-term unemployment.

Clever Pseudonym said...

And PS, Susan - in about your 8th paragraph down: "As an adult, McArdle when know exactly how she felt..."

I'm not pointing this out to be a pedantic jerk. It's just that I know you, unlike others, actually like to correct your mistakes.

Susan of Texas said...

Thanks, CP, I'm glad you did point it out.

She's so concerned about fitting in. You would think that would get old by now.

Dillon said...

You see, once upon a time McArdle herself was unable to buy things.

Hee! As soon I read that, I knew the 'shabby clothes' story would follow. I was not disappointed.

I never get tired of the way you deftly use Megan's own words to mock her.

bulbul said...

As the token European on the McArdle beat, I feel I should say something. I mean something other than "oh for the love of God".
First, did Our Lady of two Kindles actually try to be sarcastic and/or witty? Someone please tell her to stop.
- Re the commute in London being longer than ... something. What the fuck does it have to do with prosperity? Besides, family and friends of mine who live and work in London and thereabouts spend about an hour every day commuting. Compare that to some of the suburbs in the US.
- Re bringing lunch, hanging clothes out to dry etc.: according to Megan, behavior X is only found in group A which also exhibits characteristic Y. Therefore if the same behavior is observed in group B, it follows that Y is also true of group B. Logic FAIL.
- When I lived there, I literally could not afford to eat meat regularly
Megan had a shitty job. But Megan can't be poor while there are non-poor people around, because that would mean that Megan is not as good as those people AND THAT JUST DOES NOT HAPPEN! Therefore, everybody else was poor, too.
And finally,
But the amount that people are able to consume is much less than the amount Americans are able to consume
This is the point where a real econoblogger would start bringing in some hard data - purchasing power, average wage, goods baskets and what not. To much to expect of Megan, I guess.

Oh just shoot me.

But before I got, just a couple of things for that idiot Welch:
Shops closed, often by government diktat, precisely when you might want to frequent them--during lunchtime,
That's called a siesta, you prick. Different country, different customs. There is no government diktat, there's just the tradition. And even that is changing.

or a dinner-only restaurant at 6:59 p.m.
Bullshit. The French like to dine late, so 7pm is when the restaurants usually open.

Clear majorities among the people I know whose salaries are paid by the state.
Nice sample there, dipshit.

Permanent double-digit unemployment among young people who wish to find work.
According to INSEE, 19% for age group 15-24, but 6.6 for 25-49. Seems like most of those young ones eventually find work or you know, grow old.

Salaries so low that a full-time teacher I know who commutes from Switzerland makes less in Euros than the Swiss minimum wage.
There is no minimum wage in Switzerland, you dumbfuck.

Did I mention that French people are considered (according to one source) as "the Mexicans of Switzerland,"
You did now, so what, you pathetic piece of shit? That only proves that the Swiss are chauvinistic nationalist assholes who think they're so much better than everybody else. Gee, who does that remind me of?

Little to zero in detectable entrepreneurial activity or spirit.
Oh why do I bother.

Euripides said...

One of Erich Fromms personality orientations:

Marketing orientation: The marketing orientation describes the mindset in which a man perpetally molds himself into society's image in order to fit the expected norms of society. He sees the world as a marketplace, where new symbolizes good and desirous, wheras old becomes ugly and useless to him. Fromm described this mindset as saying, "new is beautiful," as opposed to the historical mindset which has been one of keeping and maintaining possessions for later, commodity - oriented use: "old is beautiful."
Marketing characters exhibit signs of extreme conformity and solve their problems as if they were simply manifestations of the market. These people look for mates as commodities to be scrutinized for positive traits which may have little to do with love, and create barriers between themselves and others defined by abstractions such as religiosity, monetary value and social status. Families which own or manage businesses or encourage conformity and a scholastic focus on the job market - that is, most families in industirialized nations today - tend to create marketing characters. This personality, Fromm said, only started to emerge with contemporary society and its focus on marketability.

My only great psychological insight into Megan was when I rotated one of the letters in her fiancés' name 180º.

Clever Pseudonym said...

Unfortunately, a lot of urbanite Americans cannot wrap their mind around being in a city that doesn't have an "OPEN 24 HOURS" or "the customer is always right because they're here to spend money" culture. It's sad really, taking the time and effort to go to a different place and then complain that everything is...different.

bulbul said...


There was one comment that stood out:

I've yet to have a European over to my house who didn't envy me my space. Not one. They are astounded by our Malls, our highways, our suburbs, and our many wide open spaces.

First of all, we have malls, we invented highways and there's plenty of open spaces in most of Europe. Well, ok, they're not wide, but it's not our fault that the low lands of Hungary are the closest thing we have to prairies.
But what really strikes me as weird is the underlying assumption - these people obviously believe that we here in Europe all live in 16th-century buildings in big cities (Paris and London, probably). We don't.

They can't imagine a life that includes mowing the lawn, shoveling the driveway, taking off on the ATV to go fishing at a remote stream.
My dad has a big-ass house, mows the lawn, shovels the driveway etc. etc. Same applies to millions of people who live in villages, townships and hamlets all over the Continent.

But my real question is: doesn't that comment apply to a fair number of New Yorkers, Los-Angelenos and San-Fransiscans as well?

Clever Pseudonym said...

What a revolting comment. That's the "American exceptionalism" Susan's always complaining about. You are correct - many of those things could be said for US cities as well. Heck, there are New Yorkers who envy me my house size, and I live in what would more accurately be described as a cottage. That's because the most affordable apartments in the City are smaller than what most of my neighbors would consider closet space. But the assumption Europeans would envy us for things they have themselves is just ignorant.

Ken Houghton said...

"Things like the EITC and Section 8 vouchers really have made a quite substantial improvement in the ability of the poor to consume."

Uh, doesn't The Titanic pretend that McMegan is an Economics Writer? Most of the labor economists I know believe that about 93% of the benefit of the EITC goes to firms (in the form of lower wages paid), not workers.

Ken Houghton said...

I missed this elision of the truth before:

"Having a television in your own room is a sign of poverty mostly to the less well remunerated castes of the lower-middle class, who always feel they should be pouring the money into something more worthy; it is not an uncommon sight among welfare families in New York City."

That's because welfare (and other) families in NYC make their rooms serve multiple functions. Especially as NYC defines all living space other than a kitchen and a "living room" as a "bedroom." (I had a five-room [counting the bathroom] apartment; it was described as 2BR.)

Kids in "welfare families" in NYC don't get a television in their room; they get to sleep in a room where people also watch television.

Anonymous said...

Thanks for reading this drek and saving me the trouble! I swear, when is the right wing in this country going to go full Calvinist, and declare that all the poor people just need to pray harder, or be born the right way??

hamletta said...

I swear, when is the right wing in this country going to go full Calvinist, and declare that all the poor people just need to pray harder, or be born the right way??

What, you mean they haven't? It's been the subtext of everything right wing since I can remember, and I'm old.

But if you'll excuse my pedantry for a moment, I call it twisted Calvinism. As an amateur student of theology and the Reformation, I think it's unfair to Calvin. He wasn't that much of a prick.

Halloween Jack said...

Even for MegMac, this is... remarkable. She really thinks that she had to gut it out for a few years there.

Personally, I think that the sort of pan-European situation that she describes is pretty desirable. Having just blown nearly a third of my biweekly paycheck on getting the brakes on my car fixed (and there are still plenty of things that need to be fixed, but they'll have to wait for the next non-rent check), I can say that I'd trade every single ATV in existence for a decent public transportation system. (And when has MegMac ever ridden an ATV in her life? They're ugly and dangerous. For that matter, she seems to put a lot of weight on things that, as a New Yorker, she'd only experience on vacation. If she digs the wide-open spaces so much, let her move to Fargo, where the only colored salt that she'd find would be the stuff that they put on the roads.)

Anonymous said...

"The douchebag is strong in this one!"