I Have a Small Brain…

April 28, 2008 at 11:38 am (Economics, History, Writing)

…so I love it when really smart people come up with really simple explanations for apparently very complex problems. Case in point: NPR on the current credit crisis, specifically why people just don’t seem to save money. I strongly suggest you listen to the article, rather than just read the synopsis, since it is, in fact, only a synopsis, and (as that name might suggest) leaves out some of the most interesting and compelling details.

In a nutshell, the problem seems to be that average human beings just aren’t mentally equipped to think long-term. They’d much rather have instant gratification. The reason that average savings rates have declined from 11% in 1982 to .5% now is that people who didn’t have access to credit before had no other choice but to save if they wanted something. Now, everyone and their mother can qualify for multiple credit cards, and so people spend spend SPEND.

It makes sense, from a historical perspective. When you study ancient history, you quickly realize that just about everything about our modern life, from our homes to our dinners to our cars and language, are perversions of nature’s intent. Okay, maybe “perversion” is a strong word. But (unless you believe that human civilization was divinely inspired) the evidence of evolution and anthropology indicates that humans were designed to be nomadic hunter-gatherers, living from day-to-day on the resources around them, moving on when food became scarce. In other words: Humans are, genetically, not particularly different from any other animal. The only important differences between me and my cat, say, are my opposable thumbs and my ability to remember something for more than about two seconds. Everything else, from the clothes on my back to the computer I’m typing on, is not found in nature, and therefore wasn’t a part of the environmental pressures that prevailed right up until humans first settled down in villages in the Ancient Near East about 10,000 years ago. And therefore, and this is the key point, however beneficial these tools and systems may be to us, we humans did not evolve to interact with them. We developed them, based in part on the mental template which millions of years of evolution embedded in us.

I originally ended this post with a long diatribe about how human beings are just animals, animals! But then I decided that was a bit over the top. I’ve pretty much covered my main points in the above paragraph. So, my favorite part of the news-article is at the end, when the reporter explains how banks and corporations have started to develop new models of saving that utilize this understanding of how people actually think to encourage people to make long-term, rather than short-term, decisions. And if, after reading this, you wonder if perhaps the banks are being manipulative rather than supportive, you may be right. But, if I’d actually finished this post the way I intended, you’d find out that, at my most pessimistic, I believe that what we call “civilization” is an unwieldy, unnatural contraption held together with hope and baling wire. And frankly, the baling wire is looking a bit worn-out. So, maybe society needs all of the “manipulative” help it can get. Because the other option is developing a whole new economic order, and historically, that’s tended to be a long and bloody affair, when it happens…

1 Comment

  1. marystan said,

    Live and learn, maybe.

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