Is your Consumer Spending Really Foreign Aid?

October 27, 2002

by Mary Mostert, Analyst - Banner of Liberty

As a member of the Great Depression generation I have had a life-long fear of getting into debt, something that I have noticed does not seem to worry the younger generation very much. And, as I have noted for some time, the number of bankruptcies is rising. Most of the young people I know seem to be almost completely unconcerned about their astounding levels of consumer debt.

One young couple I talked with recently, who have been married less than a year, assured me that they were working on their consumer debt. “We have it down to $18,000,” the young husband said proudly. I was too shocked to say anything. How can a couple married less than a year get credit cards that would permit them to stack up that amount of debt in less than a year?

However, in researching the problem, I ran across an article that seemed to indicate my concern might be misplaced. CNBC’s Liz Pulliam Weston wrote,  ( ) “As bankruptcy filings soar, one little statistic seems to have escaped much notice: people under 25 are filing fewer bankruptcies. 

“That’s right, fewer. In 2001, there were 94,717 filings from this age group. That’s 4% less than in 1991, when 98,974 filed, according to Harvard Law School’s Consumer Bankruptcy Project, which tracks such trends.”

Well, that sounded encouraging, until I remembered two factors that would affect the 18 to 24-year-old age group. First, there were more 18 to 24-year-old young people in 1991, since they were born before abortion was declared legal in 1973 and it was a whole lot harder for young people to get credit cards in 1991, when credit rates were rising due to that year’s budget deficit of $268 billion.

The fact is, today’s young people have huge amounts of private debt that my husband and I certainly did not have when we got married in 1946. Why, in our first 10-15 years of married life, we didn’t even HAVE a credit card. Then, before I got too smug about how much more sense my generation had in their youth, I thought about another figure.

In 1946, when I got married, the Federal government received $39.8 billion in taxes from the American people and businesses and spent $60.4 billion. In effect, there really WAS no consumer credit available. The federal government was borrowing all the available money.

In 2000, when one of my young friends married, the Federal government received more than $2,025 billion and spent $1,788 billion – which freed up $237 billion the public, rather than the federal government, could borrow. The budget surplus allowed the Feds to reduce interest rates for consumers and the banks to offer lots of credit cards to almost anyone over 18 who was still breathing.

The availability of credit has also coincided with the availability of cheap consumer goods from China and other Asian nations. So, what we consumers really are doing, believe it or not, is helping improve the standard of living of poor people in Asia, by buying their cheap products that create jobs in their countries, while improving our own creature comforts based on very low interest rates.

Is this bad or good? Actually, I think it is good. For more than fifty years we have spent billions of dollars through foreign aid to nations all over the world. Most of that money, which came from the American taxpayers, has been totally wasted, certainly in Africa. Much of it has been used to build fancy mansions of African dictators.

When I was in Southern Africa in 1991 and 1992, I did not find a single good example of American aid money going to governments that ANYONE felt was not misused. I also discovered that the only really good projects that I saw in African townships were invariably the result of individuals, or South African or American corporations funding schools, community centers, and black businesses.

Socialism and Communism really have totally failed in improving the lives of people in nations all over the world. What is working, and it is working very rapidly in China, is free trade. The Asians have a good work ethic and they caught on quickly. Japan, which we helped rebuild and reorganize after World War II is now the second strongest economy in the world after the U.S.

So, it appears to me, while it certainly is a bad idea for Americans to spend more money that they can ever possibly pay back, regardless of how low the interest rates are, I’ve decided my depression age theories probably need to be readjusted. It makes a lot more sense for Americans to buy products that make their lives more pleasant as a means of helping people in other nations, than to pay taxes on their hard-earned money to send to incompetent and immoral dictators to build mansions, buy weapons to oppress their people and fatten their Swiss bank accounts.

To comment:

Links: - MSNBC -Are today’s young people smarter about credit?



Mary Mostert was writing professionally on political issues as a teen-ager in Memphis, Tennessee in the 1940s. In the 1960s, she wrote a weekly column for the Rochester Times Union, a Gannett paper and was one of 52 American women who attended the 17 Nation Disarmament Conference in Geneva, Switzerland to ban testing of nuclear bombs in the atmosphere. She was a licensed building contractor for 29 years, as she raised her six children. She served an 18 month mission as Public Affairs Director for the Africa Area for The Church of Jesus Christ of Latter-day Saints in 1990-91. In the 1990s she wrote a book, Coming Home, Families Can Stop the Unraveling of America, edited the Reagan Monthly Monitor and talk show host Michael Reagan’s Information Interchange for seven years. She now operates the website, Banner of Liberty.

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