What Caused and Happens after the Economic Collapse

In the March 2007 issue of Clio’s Psyche, the Chinese financial analyst Lily Xu and I published a piece entitled “Comparisons and Reflections on the Psychology of Savings.” It was published as part of a symposium where leading economic historians and an educator were invited to comment on our work. We suggested that Americans were unable and unwilling to save because of an insatiable sense of greed for all things consumable. America was an overweight (33 percent of adults are obese), overspent, and overworked society, which was in serious debt as a result. We used Robert Shiller’s article entitled “Thrifty China, Spendthrift America” to explore why it was that the Chinese were able to save so much more than Americans. Our article was roundly dismissed by commentators Collins, Felix, and Reynolds,

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who suggested that, in fact, debt and spending were signs of strength in a society. They felt our piece was far too dark and pessimistic. The article was written 18 months before the financial collapse in America, which was produced by just the kind of overspending and failure to show restraint we wrote about. Debt in the real estate markets nearly toppled the banking industry, global stock markets, insurance industries, and now the automotive industry.

Clio’s Psyche has presented us with an opportunity to explore the reasons behind the financial collapse in more detail. This paper will discuss the nature of American greed, how asceticism and restraint are a way out of this problem, and why it is unlikely that the mature defense of asceticism will take hold any time soon.

Michael Douglas played Gordon Gekko in the 1987 film Wall Street. It was in this film that we first heard the phrase “Greed is good.” This phrase was borrowed from Ivan Boesky’s famous line “greed is healthy” and reverberated so deeply with Americans that Michael Douglas won the Academy Award for Best Actor that year. This phrase echoed Christopher Lasch’s concerns in his popular book The Culture of Narcissism back in 1979. Lasch wrote that a lack of role models produced a regression in the culture, which would eventuate in an angry, hungry population of narcissists filled with primitive rage. Since then psychoanalysts and filmmakers have focused on narcissism as the primary personality disorder of our time. Add to this a culture overwhelmed with irresistible advertising images and a media that incessantly tells us that we are nothing if we are not married to Angelina Jolie or A-Rod. This cultural environment produced a country of grim, over-competitive, over-worked, and never-satisfied consumers. All we needed was the infectious greed of the financial industry offering all the credit cards we desired and we had the perfect storm. The tipping point came in the summer of 2008, and then our entire economic system began to collapse.

Barack Obama presented his views on our economic situation in his last debate with John McCain. About the ever-

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worsening financial crisis, he said, “We have been living beyond our means. This includes corporations, government, and industry. We have been too profligate and need to learn sacrifice and responsibility.” All very true, but herein is the rub. We must become a culture of restraint, rather than one of reckless extravagance, but how is this done? It is relevant to recall that two of the seven deadly sins are greed and gluttony.

The only book that I can recall that presented some role models of restraint was the Stanley and Danko book The Millionaire Next Door: The Surprising Secrets of America’s Wealthy (Atlanta: Longstreet, 1996). The authors discovered that the real millionaires in America, the ones that actually had over a million dollars in the bank, were those humble-looking and simple-living neighbors who drove a ten-year-old car, wore old clothes, and usually were self-employed. Those millionaires were the ones who figured out the system by avoiding the trap of conspicuous consumption. I can hear Collins, Felix, and Reynolds saying right now, “Push too much savings and too little spending onto the culture and you push us into a deep depression like the one that occurred in Japan for a full ten years.” To this I say, “There is little threat that the population will be able to learn any level of restraint or sacrifice.”

Some of the population’s understanding that rampant materialism leaves much to be desired has caused an emergence of Buddhism in America, but the clash of philosophies could not be more dramatic. Then, there is another arcane discipline that attempts to espouse the ascetic life style, which is psychoanalysis. The six mature defenses include sublimation, altruism, humor, suppression, anticipation, and asceticism, according to Meisner in The Textbook of Psychiatry (Washington: American Psychiatric, 1985). The mature analysand, towards the end of a successful analysis, is expected to find some fulfillment in restraint and the delay of gratification. In an effort to explore this little-discussed topic in greater detail, I submitted a proposal to the APA Division 39 (Psychoanalysis) 2009 spring meeting in San Antonio, which was rejected. It ap-

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pears that asceticism is a tough sell, even to supposedly mature psychoanalysts.

My view is that the culture has very few role models of restraint. Barack Obama and Ralph Nader both live famously austere lifestyles, but the list ends there. People are more drawn to the lifestyles of the rich and famous, rather than the poor and humble. Mother Teresa appears to be one of a kind.

If we turn to films, we can see how screenwriters and directors are working these themes through. Three of the most popular films of 2008 and 2009 are Children of Men; I, Legend; and The Road. All three are post-apocalyptic nightmares of a world in decay, despair, and utter depletion. At the end of each film, you can see a sense of slight, unformed hope with the girl or boy being ushered into a new world being built out of the ashes of the current world. These films are so popular, or so highly anticipated in the case of The Road, because many Americans are beginning to understand in some way that our current life of materialism, overindulgence, over-work, and indebtedness does not work. It in no way makes us happy, peaceful, or content.

Long ago in the world of the 1950s we all shared happy, hopeful images in “Father Knows Best,” “My Three Sons,” and “Leave It to Beaver.” That American experiment appears to have failed and failed miserably. We now await someone to tell us how the new world will be. I think this message will be given to us by some writer, director, or religious type. I doubt that it will come from a politician. Until this message and messenger arrive, we will try to pay off our credit card bills, make those mortgage payments, and pray we don’t lose our jobs. Let’s all hope we are not waiting for Godot, who never arrives.

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