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"Neither a Borrower Or a Spender Be..."

Philosophical musings of Chic Hollis

These words would be Shakespeare's advice to Americans today after the Great Recession, especially to those who had control over the purse strings of the public treasury. Since William was addressing English theater-goers of the early 17th century, it's not clear why he was advocating "Neither a borrower nor a lender be." I suspect that he had some strong opinions about debtors, creditors, and debtor prisons.

400 years later some of the banks who were borrowing from the Federal Reserve short term and lending long term to those citizens who wanted to become home owners became "too big to fail." Consequently, the unhappy taxpayers who contribute to the coffers of the Federal Government were told that the government had no choice but "bail 'em out." The pseudo-private agencies of Fanny Mae and Freddie Mac were also bailed out as was A.I.G., the guarantor of the largest financial gamblers in the world who took undo financial risks with derivatives and swaps.

Of course, that is old news to anyone who reads the Wall Street Journal along with NewsBlaze! The government changed the bankruptcy law just in time to save the over-extended credit card companies who were charging outrageous interest rates that used to be considered usurious. But that's a long story for another musing. I want to concentrate on the theme of the title of this musing.

In times of high unemployment, huge pay-outs of unemployment compensation, increased costs of entitlements, and the reduced receipt of revenue due to business decisions aimed at improving productivity in the face of a significant decrease of consumer spending, our government programs are grossly underfunded. Living in both California and the United States of America frightens any patriotic citizen who pays income taxes (only a little over 50% of Americans have what is considered "taxable income" by the omniscient and meddlesome I.R.S.)

Unfortunately, almost everyone in America wanted to be a "Big Spender" up until recently. The biggest spenders were governments who were considered impervious to bankruptcy threats because they could always borrow from generous creditors like the Chinese using the natural resources of the land as collateral for their official I.O.U's. The gold reserves on hand at Fort Knox today are inadequate collateral despite the inflated increase in the market price of gold. These gold reserves are similar to over-priced homes that are heavily mortgaged!

The latest advice of responsible economists is to reduce federal and state borrowing and spending. However, the politicians in charge won't accept that clear message. Government leaders refuse to balance their budgets, and they strongly advocate more spending on the part of those consumers who don't have maxed-out credit cards! The vicious circle of taxing, borrowing, and spending has its theoretical limits. Polls of public sentiment about state and federal leaders show great public dissatisfaction with elected representatives. No one likes spendthrifts handing out largesse they don't have!

There is an ethical dilemma involved in helping the disadvantaged when you don't have enough money which begs government officials to ponder: "Should I be looking for a short term solution or a long term solution?" Ants somehow have made an ethical decision that has served them well for many more years than humans have trod this globe. Every ant must fulfill their assigned role: worker, warrior, queen, or suitor to sustain the viability of the colony. The colony comes first, the individual second. Consequently, those ants that cannot complete their individual missions are left to fend for themselves which individual ants aren't capable of doing.

Extra effort must be expended by all creatures in order to survive under adverse circumstances in any environment. The famous Law of the Jungle expects creatures to find the gumption to generate the required energy to solve tough problems in order to live another day. If human survival experience dictates that provisions for unanticipated adversity be stored and a reserve for unforeseen expenditures be set aside, shouldn't those requirements be acknowledged as the guiding directives for managing a nation, a city, and a family? Shouldn't the officials in charge who allowed a serious problem to happen be required to take immediate remedial action and to sacrifice for their improvident behavior? (e.g.: Investment banks, AIG, BP, PG&E.)

The trade-off for postponing gratification won't be unmanageable obligations or bankruptcy caused by the lack of morals, ethics, caution, and money. Avoiding being a big borrower, a big lender, or a big spender results from understanding and evaluating the risks being undertaken, the obvious and hidden costs of taking those risks, and the likelihood of success or failure in surviving the unpredicted adversities excluded from the evaluation criteria.

If you don't borrow, you can't spend the money a creditor doesn't advance to you. If you don't lend assets to anyone, he or she can't disappoint you when they can't return to you what is yours. If you can't learn the difficult lesson that deferred gratification is a sound way to proceed down the path of life that ignores all the temptations which can cloud your judgment, you won't have any savings for the proverbial "rainy day." If you make life more complicated for those who prefer to surrender to temptation, they have to find some other Salvador to bail them out.

In America Hamlet can be a lender, a spender, a bender, a tender, and a member of the opposite gender. He must be careful of what role he chooses. There are always the "unintended consequences" from any tough decision looming in the shadows ready to waylay the unprepared and improvident.

Chic Hollis lived on four continents, speaks seven languages and had five children, all of which helped him gain a unique perspective on life.