Tuesday, April 14, 2009

There is only microeconomics

I'm more convinced every day that there is no macroeconomics, only microeconomics. That the same principles that govern your family's finances hold true for businesses and governments. That deficit spending is always a mistake, despite complicated explanations to the contrary.

And thrift, delayed gratification and accountability go much further than to simply make a family, business and nation financially sound. Resiliency, sustainability, maturity, clarity all result from a properly paced economy whether it is your own or your country's.

When Lauren and I decided to live on just one salary, we immediately felt the crunch. But once we adapted to the reduced income, we realized we were making smarter decisions, not just cheaper ones. As frolicking DINKs, we'd been wasteful. We'd made many expensive purchases without proper research or consideration. We solved our planning mistakes with money. The problem was, we never learned the lessons of a lean wallet. Now we are. We're taking this time of transition to learn the lessons of frugality and appreciate the value of less so that when we're flush again, we can continue to make universally good decisions.

When my budget at the squadron was dramatically scaled back, we learned that prior we had also been solving our planning mistakes with money. We were troubleshooting our aircraft by throwing new parts at them. Now, all our maintainers have to study the problem, carefully consider every option before ordering a part because they usually won't get a second chance. It's making everyone here sharper, more accountable. The pilots even have to plan their missions better to eek out of each flight as many qualifying runs as possible.

It's not that being poor makes you efficient, it's that being rich makes you stupid. At least unless you've learned the lessons of not having enough. The problem with organizations is that they codify these lessons into procedures instead of integrating the philosophy of thrift and teaching the principles of measured and considered resource management. Of course there isn't a universal process and so the knowledge gained from the lean times must be internalized and passed down, free of policy, in training and mentorship.

Of course, all my university economics courses began with "intro" but I'm thoroughly convinced if we'd paused and studied the national financial "crisis" and carefully considered our options, we would have realized that rampant deficit spending on outmoded programs serves us very poorly indeed. What's more, with money we didn't earn and don't even have, I don't think we can make a good decision.

I don't buy things considering their resale value anymore. If I buy a car it's one I intend to pay off completely while I'm still driving it. Same with my home--it's not an investment, it's where I live. My grandparents always told me to never pay interest. And they exemplified their advice. But I think their good advice, their credit-wariness, comes from a wise position that you needn't simply because you can. That instead of replacement, repair would suffice; perhaps a bicycle would be more appropriate; that renting isn't necessarily throwing your money away. And that instead of a highway, perhaps very serious consideration should be given to a lovely shaded sidewalk.