The Persistence Of Time

The 4 people that regularly read my dribble (2 of which just to point our how “ignorant” I am.) know that I have an affixation with time. I have written about paying people in time, having your receipt show you how many labor hours you have spent on a purchase, and how important time is to a healthy community. Well, this post is about why this recession soon to be depression is different then any other economic dysfunction in the past. The difference as it turns out is our use of a very powerful resource. Yep, you guessed it, “time”.

First a real quick visit to the only thing one needs to know about economics (not finances or accounting which are often thought of as perfect synonyms but aren’t). One needs only to know that consumers will buy anything that they are “willing AND able”. It is not an “OR” proposition. You must have both pieces to the puzzle in order to attract a consumer to complete the transaction. The more people you have “willing and able” to buy your product the higher the price you can ask for the product. As the product prices rises you price people out of the market. Many become “unable” to pay he market price. They still want the product, but they don’t have the resources to buy it. There are a bazillion reasons why people become “unwilling” to buy a product. That “science” is known as “marketing”. There is only one reason why people are “unable” to buy your product. Because if you want it bad enough, “everything has a price”. That is all most people need to know about economics.

For most items in the US the “willing” part is easy. Everybody would like a new car, big screen TV, low hassle food, a brand new house, beer that makes women like you, and whatever the latest technology gadget is. It was the "able" part of the equation that kept a loaf of bread at a nickel and a new car at $2000. Most people were not able to spend money on anything and everything they wanted. They had to save for it.

Some brilliant strategists in some marketing department somewhere came up with a thought. “Hey if we sold our meals to more people, we would make more money.” The second guy say, “you are right! But how can we sell more. Everybody who can afford to, already comes here to eat.” A third guys says, “We could lower our prices.” The first guy says, “While that will surely get more people to buy meals, it will also reduce our profits.” The second guys say, “when people leave our place, what is it that has to happen before they come back?” The third guys say, “They need time to digest their food, and they need to spend time working to earn enough money to come back.” Simotaniously the first two said, “Time!!” The first guys says, “we could give them ‘time’ to pay off their meal.” Strategist number two say, “Right, we will let them buy the meal with money they will earn next week at work. That way, they will have already bought our product and won’t be tempted to buy their meal from somebody else!!” “Wait a second.”, the third one piped in. “What happens if they don’t pay?” The second guys say, “Oh that is easy. We will just charge like some outrageous interests rate like 3%. Nobody will ever want to have to pay that interest, so they will make sure they pay us.” And just like that the Diner’s Club Card was formed. (

My grandmother tells stories of taking my grandfather's paycheck and splitting it into envelopes. Each one labeled with a bill or an expense, and one labeled with something they were saving for. What the bills didn't gobble up went to the savings envelope

Those envelops represented time to her. Time my grandfather had to spend away from the family to pay the bills. What happened between there and here is that Americans started being able to spend "time" that had not come to pass. They were able to spend it even though there was now 100% guarantee that it ever would come to pass. They were even willing to spend more time paying for the object of their desire then they would had they just waited and earned it. Eventually they were even tilling to spend 5 full years just paying for the roof over their heads.

Now, let us revisit that economic formula again. "The market price is set by the amount of people willing and able to pay for a product." That means that if more people want a product, you can do one of two things. First you could produce more and sell them at the same price. This option of course comes with greater overhead and availability problems. The second option is to produce the same amount and sell them for more. Your overhead doesn’t rise with this option, but the trade off is that you will be pricing people out of the market. They will physically be unable to buy your product. Price it too high and you will actually make less profit then at the lower price. (This is the economic difference between Wal-Mart's picnic table and the hand crafted one from your local carpenter.) However, as our creative marketing team figured out, there is one risky option that will allow for both more customers and higher prices. Offer to spread the cost out over time. As long as they remain healthy and employed, they will eventually pay you back.

So as everybody starts getting credit cards, the price of everything you can buy with them goes up. Now with blenders and cheap tools, making more or charging more is a business decision. With housing, food, and other commodities that we use everyday the amount that can be produces is set by uncontrollable forces such as weather, wars, and disease. Prior to credit cards, if a person spent all their money on blenders, they would have to starve until they can afford to buy stuff to put in the blender. Now they can afford both luxuries.

This is what is different from the great depression and even the minor recessions in between. People had not financed so much of their future. Time is not something that the government can buy up. The people who spent it, just have to wait till it passes. If the government tries to buy theses consumers out of purgatory, they will only dam more of us to it. In the end they will not ease the people who are there trying to help. The fact that we are here today is not unrelated to the previous economic troubles. We are here as a result of remedies that did nothing to cure these prior economic woes. They just put the trouble of the 1920’s, 40’s, 70’s, and 80’s on “credit”. Turns out these “brilliant” marketing strategists earned cabinet positions in Washington in short order.

I would like to ad one footnote to this post. This giving up of our time wasn’t something that just happened all at once and the instant a credit card was introduced. Over a slow sunset of dusk to night, we have given up many things that encompass time. No we have been giving up the freedom of quality for the chains of chasing quantity of time. As first the fathers and then eventually the mothers moved from working at home to working full time away from the home, the perspectives became irrational. Now too many of us leave the schools and their peers to raise our children. We all work so hard to provide a good life for our children that we forgot the reason why we had them. It was to teach them our values, our history, and our lessons. We have turned into a society of energy generators for the big machine.


Popular posts from this blog

The Conundrum of Marriage Destroyed by SSRI’s

Disclosure post

DACA: Another Pox On Both Houses