"I own five stores, not one of which contains a thing anyone needs!" said an owner weeks before selling the stores for a considerable gain and retiring to Florida three years ago. This one man's opinion may be a metaphor for extravagance.
Nearly every early American family created wealth by cutting timbers to build homes, fishing from boats, hunting deer and turkey, making their own clothes.
A large, preserved codfish is still displayed prominently in the state capital of Massachusetts. The cod represented survival and prosperity in the early 1700s. Fish heads were used to fertilize hills of corn in sandy soil where potatoes, cranberries, hay for horses and cattle were also grown.
The hardwood forests of Pennsylvania were harvested in the early and mid-1800s. Men floated logs down the Susquehanna River. Railroad ties and trestles were cut for westward expansion and ships were built for whaling.
Northeastern Ohio coal was mined in the 1830s and beyond to fuel a growing iron and subsequent steel industry. The coal was shipped by canal and later by rail to Cleveland to fuel Great Lakes steamers. About 60 percent of the Brier Hill coal is estimated to still be extant, but inaccessible because of the room and pillar mining technique used under what is now an urban area. In the late 1800s oil and natural gas were found in northwestern Pennsylvania and Ohio. Oil was not found in Arabia until 1938.
The availability of more efficient fuels, replacing wood and charcoal, created growth of real wealth. The hourly productivity of a man's effort increased. Distribution of wealth was a challenge, but eventually many people were able to earn more than they needed for survival. The excess wealth led to comfortable living conditions. For the first time purchases of nonessential items families wanted could be made easily. The great marketing force of American consumerism was launched.
The growing production of goods and services (essential and nonessential) brought new employment opportunities and thereby more buying power to purchase even more goods and services.
Considerable wealth was earned from international trade providing institutions and individuals with opportunities to accumulate wealth. Lines of credit and loans of money expanded growth further. Credit and lending are essential to the growth of a free enterprise system. Loans provided additional choices beyond the wealth accumulated from labor and creative work. Implicit in sustainable lending, however, is repayment.
Home ownership has been an American dream. A mortgage, however, is challenging for people of modest means. Guidance is needed to make mortgages attainable for those who work regularly and understand the risks and responsibilities associated with loans.
Mortgages cannot be given away with insufficient down payments and careless subprime lending. A crisis for some owners of properties resulted when the value of properties unexpectedly plummeted below the value of the mortgages. A significant down payment indicates an established capacity to make mortgage payments. Subprime (high risk) lending is desirable, but it has to be managed carefully. The market turmoil has been the result in part of lenient, overly aggressive, even predatory lending along with uninformed, unrealistic, high risk-taking borrowers. Insufficient transparency to identify who owned the ultimate loans has added to the disaster. Bond insurers and many financial institutions have been damaged. America must improve the management of its affairs if it expects to sustain business with credible and effective strategies.
People are influenced by the promotions of industry and retailers, which have provide most with a comfortable living. It may be through trial and error of economic cycles Americans are approaching an awakening. If we do not as individuals and groups become more aware of our implicit responsibility for our own well-being and that of others, both things wanted and things needed will become less available.
The nation needs more productivity of wealth and savings, less consumption of unneeded things. Unbridled ambition has caused the great American experiment damage. Increased regulatory tempering of egregious practices are already coming from the Congress.
Americans must rethink what makes a free society and a vibrant economy prosper. Frustration with global economic competition, fiercely higher gasoline prices, endless war in Iraq and Afghanistan, growing national debt cannot justify desperate, extravagant business practices. Change is needed.