Did Dave Ramsey really expect people to learn?
On Wednesday’s Your World w/ Neil Cavuto on Fox News Channel, personal finance author and radio talk show host Dave Ramsey lamented that many American consumers apparently haven’t learned the lessons of the recession from which the U.S. economy is still reeling. In December alone, Americans added over $19 billion in new consumer debt to a total outstanding credit balance of roughly $2.5 trillion!
Now, not all borrowing is fundamentally bad — if borrowers get good value for their credit purchases and are able to comfortably and steadily pay down their debts, then increased borrowing, within reason, can even be interpreted as a sign of increasing consumer confidence and of upticks in both employment and the consumer-goods sector of the economy. However, Ramsey’s worried — and rightly so, I think — that too many Americans are once again overextending themselves and being over-confident in their abilities to manage and pay down the debts that they’re back to amassing.
What surprised me is that Ramsey seemed surprised. I’m not. As I said repeatedly when the mortgage crisis first began to reverberate through our economy, it didn’t take a Ph.D. in psychology and an M.B.A. to understand that bailing people out was a bad idea. All it takes is a common-sense understanding of human behavior to figure out that it would’ve been healthier in the long run to let people — individuals and corporations alike — experience the consequences of their irresponsibility. Otherwise, what’s the incentive for them to behave responsibly now?
A good way to ensure the recurrence of a bad behavior is to spare somebody the negative consequences of it, and that’s exactly what we did — we sent the message that if things ever get really bad again, not to worry, we the responsible will swoop in and rescue the irresponsible among us. Who would’ve thought that everyone would start behaving financially responsibly after that? Dave Ramsey may have, but I didn’t!
Sure, the recession may have been worse in the short-term wake of the mortgage crisis without any government intervention, but if the consequences of our interventions now include future crises and future recessions, then the cumulative damage in the long term will likely end up being greater. So, if many Americans appear to have learned little or nothing from the past few years and to be borrowing and spending as irresponsibly as ever, when you consider both the reassurance that we’ve given them with our various bailout programs and the horrendous example that we’ve given them with our collective (i.e. federal government) borrowing and spending, it really should be no surprise to anyone. (And perhaps the most disheartening thing about it is that kids across America are learning that same financial irresponsibility from their parents’ examples!)
While I’m here, two murder cases involving psych meds are making news this week:
Missouri Teen Murderess Sentenced
Remember back in 2009 when a 15-year-old Missouri girl brutally murdered her 9-year-old neighbor just for the thrill of it, even writing afterward that it was “pretty enjoyable” to kill someone? Well, the convicted murderess, now age 18, was sentenced on Wednesday to serve life in prison with the possibility of parole after 15 years. Her attorney argued for leniency based on a combination of depression and side effects of antidepressant medication. It’s a tragic case on multiple levels to be sure, but I won’t be comfortable with this girl ever being back out on the streets with the rest of us. (And by the way, I don’t think that depression or antidepressant medication probably played a significant part in this girl’s decision to commit murder, but I really don’t think it even matters because I’m not narcissistic enough to expect that psychology will ever be able to guarantee that a psychopathic desire to kill for a thrill, once evident in someone, won’t reemerge).
Virginia Lacrosse Murder Trial Underway
Remember the University of Virginia lacrosse player whose girlfriend was found dead in her dorm room in 2010 after an alleged altercation with him in which he punched or kicked a hole in her door? Well, testimony is now underway in his trial, and despite the hole in the door, despite evidence of blunt-force trauma to the victim’s face and head, and despite his previously saying “I should have killed you,” the defense will apparently be arguing that she instead suffocated because of the face-down position in which she passed out on her bed after ingesting a combination of alcohol and the ADHD medication Adderal. No surprise to regular readers, I’m sure, but I’m not buying that for one second!