Blame Yourself for the Recession

by: Shaun Rein

This column originally appeared in Forbes

Got your pitchfork ready? Americans are a frustrated lot these days, casting blame in every direction for the economic mess we're in. Who should we really blame?

Some would pick President Obama, for recklessly increasing the size of government, others his predecessor George W. Bush, for starting two costly wars and cozying to the rich. Some point to Alan Greenspan, as the godfather of financial deregulation. Others blame those fat cats at Goldman Sachs, Morgan Stanley and other Wall Street banks. New York Sen. Charles Schumer turns to China as the source of all our problems, blaming the Chinese for buying up our debt and producing products better and more cheaply than we can. Huh?

We should all be looking closer to home--in the mirror, to be precise. Much of the blame for the Great Recession belongs with you, me and just about everybody else. As a nation, we came to feel entitled to the high life even if our earnings could not keep up. Somehow the can-do attitude of America's Greatest Generation was replaced by a self-entitled attitude of "I want the best and I want it now." It is time for us to take responsibility and make changes to our policies and consumption habits, or we'll end up mired for decades in BP-like tar balls.

Over the last few decades more and more middle-class Americans of modest means started feeling that they too should have vacation homes, take trips to Europe every year and retire early. The very dangerous result was a large portion of the population living beyond its means. I spoke with a baby boomer recently who never earned more than $60,000 in a year yet became indignant at the suggestion that perhaps it wasn't the best idea for him to retire at 50, drive a Range Rover and have multiple homes. Even as our average life span now approaches 80, we keep retiring earlier and earlier. In reality the retirement age should be closer to 70.

But it's not just the boomers' fault. My younger generation shares their problem with spending and with demanding instant gratification. When I graduated from college, I considered buying a Porsche before I even had a job. I settled for a Lexus. I just knew that my earnings in the future would be able to cover those cars. A friend of mine who still had college debt traveled to Italy to select furniture and granite when he bought his first condo as if he were a Rockefeller or a Vanderbilt in the Gilded Age. He'd probably read F. Scott Fitzgerald's The Great Gatsby too many times--or too few.

Younger people are to blame too. The New York Times recently ran an article, "American Dream Is Elusive for New Generation," about an entitled 24-year-old named Scott Nicholson who turned down a $40,000-a-year job in this terrible job market because it wasn't good enough for him. Naturally his schooling had all been paid for by his grandparents, he still was living rent-free with his parents, and he was hardly looking for a job, sending out just four or five résumés a week. He needs to grow up, and he needs to be taught about the value of a dollar and building your own opportunities. Unfortunately, too many Americans are misguided like him.

Our consumption is out of control. Did you know there is a mass of bottles, plastic bags and other garbage the size of Texas--almost as large as LeBron James' ego--floating between California and Hawaii? My brother-in-law and I recently went to a Bed Bath and Beyond in the middle of the day. We were the only two customers in the entire massive store, and we were shivering from the frigid air being blasted from the air conditioners.

We could learn a lesson or two from China, where the Shanghai government caps the temperature at 79 degrees in malls and office buildings in summer to save energy. It's illegal there to get a free plastic bag at the grocery store (you have to pay a nickel or bring your own bag), helping reduce waste and petrochemical use. We should also increase the money paid for recycling aluminum cans from a nickel to a quarter, even if Pepsi (NYSE:PEP) and Coke (NYSE:KO) object, as they most likely will. Maybe if we made simple changes to how we consume we could rein in waste, decrease pollution and reduce our dependence on oil, a commodity that has wrought so many problems.

As depressing as the last two decades have been, all is not lost. Since the financial crisis, the signs are good that more Americans are making prudent choices. We are retrenching. Even with the markets getting better, we are still cautious about spending. People are reusing bags at supermarkets. The Hummer is gone. We should also be heartened that this year 46,000 Americans, including 12% of all Ivy League seniors, applied to Teach for America, to give back and provide better educational opportunities for those less fortunate.

Now, we certainly can and will indulge in luxury, at least once in a while. But hopefully when the economy recovers we will pause before buying that several-hundred-dollar bottle of Cristal or that Rolex watch and make sure we really can afford it.

It is still true that we need better financial regulations that can prevent Wall Street from hijacking the economy, and a saner political culture that allows for things to get done. But a large part of the change will have to come from us, the people, in how we think about the future and the effects of the choices that we make every day. We need to relearn the value of a dollar. For my part, the last car I bought was not a Lexus but a Toyota Camry (NYSE:TM)--a car well within my means.

Disclosure: Disclosure: none