Elizabeth Warren and why families are increasingly squeezed

This video (below) by Elizabeth Warren is very interesting.

http://youtu.be/akVL7QY0S8A

She essentially says that despite, the fact that family incomes have increased by approximately 70% since 1970 (due to most women joining the workforce), the total amount of family debt has increased. Families used to save money. Knowledge is going to debt. She thought that this tendency might be cause by our greater consumeristic, for people are more profligate and buying things than they were in the past. However, when she actually ran the numbers on what people are buying, she found that in most categories people are spending less than they were in 1970. So, where has all the money gone?

What she found basically is that certain cartel industries are sucking families dry, and there are also added cost to having two wage earners set up one.

Let’s look at the costs that exist today, that were much more manageable in 1970.

One of the biggest factors that is driving families into the poor house these days is the increase in mortgages due to the overvaluation of houses. Despite the fact that interest rates are fraction of what they were a few years ago, the mega-mortgages the people now have to undertake are helping to crush them financially. I remember being surprised and appalled at the constant giddiness in the media a few ago, about how wonderful everyone thought it was that housing prices were going up and up. What is so wonderful about unaffordable housing? Of course, Wall Street was making out like bandits during this period, and those who already own property did very well. The rest of us have to suffer under unaffordable mortgages just to try to be able to buy a house to live in.

Even now I continually hear in the media about how the government must do something-anything-to get housing prices up to where they were at their peak in 2006. Yes, that makes sense. We must further bankrupt our already bankrupt government to make sure that housing remains as unaffordable as possible. I can only imagine that the media is under the influence of the greedy bankers, and the greedy wealthy property owners. The reality is that housing prices were inflated to bubble levels through unsustainable debt, and they now have to return to sustainable market levels. In other words housing has to return to level which people can actually afford. A lot of people are under the delusion that when they get a mortgage for a house (which after all is a speculative asset paid on margin) during a massive housing bubble supported by predatory lending and outright fraud, and then they are indignant when housing prices fall, as if housing prices always act as a one-way ratchet that can go up but never go down. This is extremely odd considering that nobody seems to be surprised when stocks go up and down, or the price of gold goes up or down, or farmland goes up and down in price. But, so many think that housing is always supposed to be a one-way street, straight up.

Another area that is sucking families dry financially is the entire cartel of education. The government spends an enormous amount of money to support the public school monopoly, usually with mediocre to poor results. I can’t help but think that more choice and competition in that sector would be able to produce more efficient and effective outcomes, considering all of the money that goes into supporting education. Due to the rigid monopolistic nature of public education, most parents have to pay a premium to be sure that they’re able to buy a house in a good school district. A good school district generally means that the school has good students who come from solidly middle or upper-class families. Parents need to pay extra for a house that is in the right district, meaning that housing is more expensive for families with kids. Couples without children can afford to live in cheaper houses, that still provide a high quality of life, but have poor school districts.

But, the public school system is nothing compared to the costs of higher education and preschool. In 1970 most people didn’t hope to go to university, and they expected to have the opportunity to have a decent job and become middle-class. Today it’s so conditioned into our mentality that anyone who doesn’t go to college is a loser, so tons of weak (not academically inclined) students are going massively into debt, while giving up years of work experience, so they can go to some third rate college, get a degree in something like communications, and end up working in a job that pays $22,000 year in a store.  Their wonderful BA has not prepare them for the job market, and has only given them lots of debt, along with the missed opportunity costs of not having gained work experience or salary for a least four years while they were off studying.

Politicians and the educational establishment, along with the media, have continually pounded into our heads the idea that higher education not only is great for the individual, but for the nation. However, in the last 40 years college attendance has gone from a rarity to men on, all while our quality of life and economy have stagnated. Switzerland has a very low rate of university attendance, and an economy that we can only envy.

University is good for some people: for those in need intensive vocational training such as engineers and medical doctors. It also can be a lot of fun for those who are academically inclined and have the money to afford the luxury off a humanities education. For those who are not strong academically, don’t really know what they want to do, or are too poor to afford a humanities education, going to college usually turns out to be a great way to get in debt, and to miss out on four years of lost salary and potential work experience. For those who are not rich, people need to take a sober hardheaded look as to whether university is really worth the time and money. Sometimes it is and sometimes it isn’t. But, despite what everyone says, it is not for everyone, and everyone does not benefit from it.

The reality is that success is determined far more by one’s innate abilities, hard work and a bit of luck, than it is by getting a degree. Traditionally getting a college education paid off, because, in the past, only the academically gifted or the rich went. The gifted and the already rich tend to be destined for success anyway, whether they get a higher education degree or not. People who are not academically gifted are not going to suddenly be turned into intellectual achievers, just by going to college. What we end up with is an unacademically inclined individual, who was lucky enough to graduate from a really easy college, and get a degree that in the end will be next to worthless.

In terms of career success at most getting a college degree is a provisional foot in the door. The rest is up to the abilities of the individual. Some people have it and some people don’t. University generally does not help those who do not have it. Our egalitarian and politically correct society wants to believe that we are all the same, and that college is the great equalizer that launches everyone into the upper middle class. It is simply not true. If people do not have what it takes to succeed in a professional career, all the college in the world isn’t going to help much.

Many many people would be far better served in a very focused one or two-year program that would teach them applicable job skills, or in a good internship program that would give them some real world experience. We actually need as a society more people with concrete skills and experience, then we do sociology majors.

Another added cost in the last two years is a rise of the popularity of preschool. I believe the preschool is not necessary as long as there is good parenting and the children are allowed to play with other children, to learn appropriate socialization skills. Despite this, the educational industry has been able to convince many worried and insecure parents that their children will be damaged for life if they don’t get them into at least two years of preschool. So, already financially overburdened families are digging deeper into their wallets to pay for preschool.

Of course, in 1970 children didn’t need preschool because the vast majority of the mothers stayed home to raise them.  Stay at home moms could arrange their own socialization activities, usually with other stay at home moms. I think in many ways preschool has become a substitute for good parenting, because the mothers are all off working. This is just another example of how getting both parents to work brings with it several hidden costs that reduce the benefits of such a system.

We talked about how mega-mortgages, and higher education debt is undermining the financial security of the middle-class. Now let’s talk about how medical costs are doing their part to push people into bankruptcy. It is no mystery to anyone that healthcare costs have risen steadily for the past several decades, while quality suffers. In other words we are getting a terrible return on investment. Why is this so? Well, the healthcare industry is essentially a series of cartels and monopolies that all work together-and in collusion with the government and the media-to extract as much money as they can from the economy. The whole system is oriented- not towards preventive health care while exploiting cheap and effective solutions-but towards pushing the newest and most expensive medications, procedures and tests.  Pharmaceutical companies encourage doctors to prescribe the most expensive medications. Medical equipment manufacturers do the same. Doctors and hospitals have an incentive to overtest, over procedure and over medicate, because the more they do it, the more day can drive up the bill, and the more money they make.  With the collusion of the government, our health care system is free of antitrust laws and is not competitive. There are so many things that we could be doing to cut down on medical costs-some as simple as just improving our diet-which are never really fully promoted, because health in the healthcare business is a danger to the bottom line.  No, much better to encourage Americans to eat a garbage diet, fill their environment with toxins, and be stressed all the time, and then when they inevitably become sick, to undergo as many overpriced and often unnecessary tests, procedures and pill popping, as it possibly can. Fomenting and maintaining chronic illness is the most profitable medical business. Having a healthy population is not good for profits.

So far we have seen how the corrupt industries of mortgages, private education, and healthcare are squeezing Americans more and more. The other reason that Americans have less disposable income than in 1970, despite the fact that their income has risen approximately 70%, is that having a second parent working also brings with it additional costs.

When mom works she doesn’t only bring home a paycheck but she also creates new costs.  For instance, when the mother starts working she will probably need a new car to get her to work, with all of the added expenses of that entail. There will probably be some additional daycare or nanny costs to take care of the children when mom is at work. Also because a family makes more money with the two incomes, it also has to pay more taxes.  There might even be some costs associated with more restaurant meals out, because everyone is too tired at the end of the long day to make dinner and wash the dishes. Much easier just to take the family to restaurant.

There are other costs as well. Having both parents working makes the family finances much more precarious, because if someone gets sick, and one parent has to stay away from work to take care of the sick person, that is one less salary that the family can depend upon.  In the old days mom was usually at home so if Junior or grandma got seriously ill, she was available to go to the hospital and take care of that person. Today if mom wants to do that, she is very likely to lose her job, and put the family into a financially precarious situation. Also in the past if dad was fired, mom was usually free to find a quick part-time job to help the family finances.

But, I think there is an even bigger hidden Price we pay when we have both parents working. When the feminists were pushing all the women to go off to a glorious future in the workplace, nobody seemed to think about who is going to take care of the house and the children. There was some talk about Swedish style daycare provided free by the government, and that husbands would take up all the slack. This is little more than a fantasy. The reality is that any kind of high-quality day care is extremely expensive, and someone has to pay for it. Not only that, but do we really want the government, the same ones who gave us our public school system, the post office and the TSA, to be taking care of our precious little loved ones all day long?

The feminists have done an excellent job at demeaning domestic work.  But, despite their looking down their nose on it, someone still has to clean the house, do the shopping, cook the food, wash the dishes and take care of the kids. Despite what feminists think, these are really important tasks that need to be done, and done well. From millennium women usually did these tasks and did them well, and usually with a sense of pride and satisfaction. Women have always been the pillar and center of the family. We have now removed that pillar and put it in the workplace with disastrous results.  The household is teetering. Kids have behavioral problems because their parents are not around to love them and educate them. The quality of food has steadily decreased as tired parents look towards McDonald’s and microwave dinners after a hard day at the office. Everyone is tired and stressed. Women feel guilty at being separated from their children all day. Social and community relationships are weekends and undermine. Finally the family is living more financially precariously than ever before.

Going out and working was sold to women by feminists as a glorious opportunity to enjoy life in the working world. While many have enjoyed their corporate careers, so many others have ended up tired, stressed, resentful and guilty. Not having a mother at home has brought with it a whole host of negative secondary consequences which is affecting our society.

In the past women were mostly pressured to stay at home. Today they’re pressured to go out and work. Not only is there a lot of social pressure to leave the house, but due to the increase in the cost of living (in large part promoted by the fact that almost all women work), most women feel that they are obligated to work. Women have gone from feeling pressured to stay home and have kids, to being pressured to abandon their kids while they pursue a full-time career. Feminism is supposed to be about options for women, but it has merely traded one form of obligation for another.

If women don’t have kids, and they want to have a career, that is perfectly fine. I think they should do what they want and what they think is best for them. However, if they have kids I think that mothers should stay home, especially when the children are young. These days having children is not an obligation. It’s a choice, and as such it’s also an enormous responsibility and something that should not be undertaken lightly or frivolously. I believe the people should not have children unless they can adequately take care of them, and that implies at least one parent staying home full-time to take care of the kids. Basically it boils down to the fact that if people want to have children, they should be prepared to sacrifice for the welfare of their offspring, which means that they should only do it when they have the means to raise their own kids adequately. What’s the point of having children if the parents are going to be off at work all day, and the kids are being raised in institutions? What’s the point of having kids, if the parents rarely see them?  The parents will feel guilty, and the kids are very likely to grow up with psychological and behavioral problems. Let’s do us all a favor and decide that we are only going to have children when we can do it the right way. I think it’s perfectly fine for couples not to have kids.  They shouldn’t feel pressured to do so, if not inclined or able to make the sacrifices necessary to do the job right.  If you follow this rule, everyone will be much happier.

In the end, as much as we might try to deceive ourselves, we can’t have it all and there’s no free lunch. Remember told that they could have it all, and look what has resulted. It’s time to start being realistic about what we can and can’t do. To me being a parent is too much of a responsibility to undertake it in an ad hoc manner.

So, as we can see, despite the fact that incomes has steadily risen in the last few decades, American families are poor and more financially vulnerable than ever before.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: