Oct

17

 A Time to Reverse Caloric and Cash Accounts

America and Americans face very small problems. It is just that a hundred million small problems combine to loom large. And a decade of small daily choices made poorly combine to wreak the health and finances of American families.

The great news is that slight alterations to daily protocols can turn surpluses to deficits and deficits to surpluses. Slight rule changes in a few institutions would alter incentives, turning dead zones to flourishing ecosystems.

Through most of human history social institutions combined with known technologies to produce monthly money surpluses but caloric deficits. Responsible people and societies knew to preserve and set aside food from the few days of successful hunting, harvests, and fishing for the long winter months when nature would yield no calories. A high savings rate is the standard habit of mind for the poor. Americans after the great depression counted their pennies (when pennies still had value). Hundreds of millions across China–the recent or still poor–have equally high savings rates. Woven deep into social institutions is the reality that without high savings in good times, a single season of too much or too little rain will starve all families without buying power set aside.

A very interesting review of Cormac Ó Gráda book, Famine: A Short History updated my understanding of famine through history, but confirms that Malthus was wrong in his pessimistic claim that population growth would lead to famine. Ó Gráda confirms that combinations of bad weather, war, and bad government have ever been the sources of great famines.

Good money is the means for the poor to survive crop failures. But governments have a habit of seizing surplus crops and debasing money. (Amazon automation is, as I write this, busy picking and packaging my just-purchased copy of Benn Steil's "Money, Markets, and Sovereignty" which was just yesterday highly recommended by a friend.) Hard money is the great technology for converting via the marketplace, daily and weekly food surpluses into the means to survive occasional harvest, hunting, and fishing failures.

But in the modern world, in America at least, historical reality has been turned on its head. The average American can hardly last a few hours in caloric deficit. For so many centuries the central challenge was setting aside food surpluses in summer and fall to survive winter (one stratege: a parade of harvest feasts to accelerate weight gain through summer and fall). The modern lack of winter is the new challenge. (Ships and airplanes filled with Southern Hemisphere harvests allow us to avoid even the canned food common a decade ago.) Restaurant chains serve millions of feasts to constantly celebrating Americans morning, noon, and night. Omelets that would feed a village hang over plate edges each morning at IHOPs across America, with hash browns stacked alongside, and a separate plate for hotcakes or toast.

Overstuffed with food, Americans find it hard to think about savings (or about anything else for an hour or two as all available blood is allocated to digestion).

It used to be so much easier because it was infinitely harder. Most jobs required exercise so most people were fit. Only the very few rich had enough leisure and wealth to systematically overeat, and gout provided one of nature's many punishments for the undisciplined aristocracy.

America's major problems are just this simple to solve: exercise, eat, and save responsibly. Vast billions of future health care spending will be avoided when Americans learn the long history of famines and the rich and very unusual world they were born into. Daily labor that is no longer an exhausting enterprise providing a free on-the-job health club. So now volition is required to stay fit.

People have to notice and take responsibility. With so much food so easy to find, people no longer have the natural urge to set aside daily surpluses. Yet a modest savings rate and a sound currency would solve most of today's economic and financial problems. A savings rate as slight as ten percent would go entirely unnoticed in at least ninety percent of American households. Saving twenty or thirty percent would be little challenge for most households. Just waiting six months to a year before purchasing the next big-screen television, car, or computer, would allow the price to drop enough to set far more savings aside.

But without a great book, movie, faith, or movement to push the social reset button, it is not clear how people will come to think clearly about these simple things. Chains of habit long forged are hard to break. A politicized public is distracted repeating what they hear about corrupt politicians, greedy corporations, and other external causes for claimed social calamities. It is easy to miss the most basic reality that in the modern world's market economies of the modern world we have an historically rare opportunity to take responsibility for our own daily cash and caloric accounts.

Though bottom up changes work better than top-down reforms, if insurance companies could fully charge overweight customers for expected higher medical expenses, that cash cost would add to the daily discomfort of being overweight and spur change. And if airlines could charge more for heavy customers, fewer people in the future would suffer being mashed in the middle seat between obese and obviously unhappy people (as I was on Thursday).


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