“Even after he got fat, he just ate and ate.”

There is no need to buy Michael Lewis’ latest book, Boomerang – it is all available free online – but there is a reason to read it: you’ll know that it is selfishness and shortsightedness that devour us. We are genetically programmed to live in a world of scarcity, but when given low-hanging fruit we devour it, no matter how rotten it may be. We eschew delayed gratification, and thrive by living in the moment without regard to the future.

Boomerang is a collection of five long (and hilarious) articles of Lewis’ “financial-disaster tourism,” originally published in Vanity Fair. All are linked below for those who don’t mind reading 40 pages on their computers. I’ll expound on two of the articles here.

The Icelanders were tired of fishing, and so became investment bankers – some with only a few days’ worth of training – and sank their nation.

The Irish, like Americans, mocked those who said their real estate was a bubble. The government of Ireland eventually confessed to losses of 34 billion euros, which is the equivalent of the U.S. losing $3.4 trillion!

The Greeks were perhaps the most ridiculous of the lot: $1.2 trillion of debt, or a quarter-million dollars for every working Greek. This was not due to a subprime crisis, but to perennial lying by the government about how much it was spending, and reckless disregard by politicians who showered more and more benefits on people who were increasingly less productive.

The retirement age for Greek jobs classified as “arduous” is as early as 55 for men and 50 for women. As this is also the moment when the state begins to shovel out generous pensions, more than 600 Greek professions somehow managed to get themselves classified as arduous: hairdressers, radio announcers, waiters, musicians, and on and on and on.

The Germans made the mistake of trusting everyone else, including the Irish and the Americans. Lewis writes specifically about California and San Jose, but one fears he could easily have written about many similar states and municipalities. But California – with its natural riches so skillfully squandered – is a great pick.

[Chuck Reed, the mayor of San Jose, has] a problem so big that it overwhelmes ordinary politics: the city owes so much more money than it can afford topay to its employees that ic ould cut its debts in half and still wie up broke. ‘I did a clculation of cost per prublic emploee,’ he says, as we settle in. ‘We’re not as bad as Greece, I don’t think.’

We are not as bad as Greece. Some consolation.
We are still bad, and certainly worse off than we were before, both fiscally and morally. The fiscal reality is well known. Well, the specifics may not be well known – how broke we are exactly – but the average American knows we are broke. That’s a start. The moral bankruptcy is not spoken of nearly enough. Living outside one’s means or living off of unearned income corrupts us morally. Work does not just make us better off, it makes up better.

In Greece, flawed character – corruption, tax evasion, bribery, etc. – is the name of the game. Voters demand more and more services of the state, while working and paying less. The result is an utter disrespect of the civic virtues of citizenship and of their fellow citizens themselves.

The Greek state was not just corrupt but also corrupting. Once you saw how it worked you could understand a phenomenon which otherwise made no sense at all: the difficulty Greek people have saying a kind word about one another. Individual Greeks are delightful: funny, warm, smart, and good company. I left two dozen interviews saying to myself, “What great people!” They do not share the sentiment about one another: the hardest thing to do in Greece is to get one Greek to compliment another behind his back. No success of any kind is regarded without suspicion. Everyone is pretty sure everyone is cheating on his taxes, or bribing politicians, or taking bribes, or lying about the value of his real estate. And this total absence of faith in one another is self-reinforcing. The epidemic of lying and cheating and stealing makes any sort of civic life impossible; the collapse of civic life only encourages more lying, cheating, and stealing. Lacking faith in one another, they fall back on themselves and their families.

Such attitudes exist in our own society as well, though fortunately to a much smaller extent. Some areas excel in this Athenian arena though. Take Vallejo, CA.

Back in 2008, unable to come to terms with its many creditors, Vallejo declared bankruptcy. Eighty percent of the city’s budget—and the lion’s share of the claims that had thrown it into bankruptcy—were wrapped up in the pay and benefits of public-safety workers. Relations between the police and the firefighters, on the one hand, and the citizens, on the other, were at historic lows. The public-safety workers thought that the city was out to screw them on their contracts; the citizenry thought that the public-safety workers were using fear as a tool to extort money from them. The local joke was that “P.D.” stands for “Pay or Die.”

Thus a society begins to unravel.

The problem with police officers and firefighters isn’t a public-sector problem; it isn’t a problem with government; it’s a problem with the entire society. It’s what happened on Wall Street in the run-up to the subprime crisis. It’s a problem of people taking what they can, just because they can, without regard to the larger social consequences. It’s not just a coincidence that the debts of cities and states spun out of control at the same time as the debts of individual Americans. Alone in a dark room with a pile of money, Americans knew exactly what they wanted to do, from the top of the society to the bottom. They’d been conditioned to grab as much as they could, without thinking about the long-term consequences. Afterward, the people on Wall Street would privately bemoan the low morals of the American people who walked away from their subprime loans, and the American people would express outrage at the Wall Street people who paid themselves a fortune to design the bad loans.

Why exactly do we have such high personal indebtedness? It’s not due to the current recession; our indebtedness predates it. But rather it is due to our desire to keep up with the Joneses. It is due to our materialism. I have a right to the iPhone. I have a right to those designer jeans. Everyone has a right to everything that is new and good and desirable. Walmart reintroducing lay-away might not be a bad indicator when all is said and done. It may mark a return to more personal responsibility, which may translate into more public responsibility. We need more delayed gratification and savings, during good times and bad.
Either buy the book or read the articles online, but either way, read Boomerang.

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2 Comments

Filed under Economics, Europe

2 responses to ““Even after he got fat, he just ate and ate.”

  1. Pingback: The Cost of Dependency | Thoughts on the Passing Scene

  2. Pingback: Michael Lewis on Charlie Rose | Thoughts on the Passing Scene

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