"Whenever I go into a restaurant, I order both a chicken and an egg to see which comes first"

Tuesday, June 24, 2014

How Money And Value Determine Who We Are

Whenever I drove from Carlisle to a small Indian store near Route 310, I always took the same route and wound my way past the ramblers of North Archer.  The streets were uncongested, pleasant, and most important of all familiar. The route was far longer than many other alternatives, but because because of its simplicity and predictability it was worth the extra distance.  I did not have to pay attention to tricky intersections, merges, or unpredictable traffic patterns. I could think of my upcoming trip to Paris, my children, or what I was going to prepare for dinner.

Each time I left Carlisle for Spice of India, Mrs. Randall would ask me how I was going to get there.  I told her, as I had many times before, that I was going down Sycamore Street, past the school, and and eventually to Martin’s Lane. “Why would you do that?”, she asked. “You’re wasting gas”, she said, pulled out a map of the county and with her husband outlined a route that would indeed be many miles shorter, but took me through the worst parts of Towson – the malls, shopping centers, endless lights, and abruptly changing traffic patterns of the most densely populated and rapidly growing Baltimore suburbs. 

For her money had an absolute value, not a relative one.  It was simply unconscionable and ignorant to knowingly spend more money than you had to. The non-monetary value of my familiar and predictable route did not figure in her system of valuation.

Her husband was no different, and he spent hours on the Internet finding the best price for tools, replacement parts, fertilizer, and engine oil.  He spent even more researching insurance, banking services, and medical care.  Fractions of percentages, pennies off premiums, rewards and bonuses, free trial periods were all worth the long and laborious task of finding, tracking, and evaluating prices.  Opportunity cost meant nothing to him.  He could have easily made far more money than what he saved through his obsessive search for rock-bottom prices; but ignored the possibility.  Like his wife, he felt that it was simply ignorant and wasteful to do otherwise.

There was nothing new in their house.  Every appliance in the house had been fixed, jerry rigged, and tinkered with so many times that only he could operate them.  The dishwasher clanked and gurgled.  The vacuum cleaner howled and whined; and the blender shook and rattled the china. His handwritten instructions were taped on everything. “Hold down On button for one minute to start operation…Press the On and Pause buttons together before releasing…Turn motor off every ten minutes…”  The endless maintenance, repair, and marking of these old, rattling machines was worth it.  Spending $500 for a new appliance or for anything for that matter was simply impossible.  If a thing could be fixed, it should be fixed.

Mr. and Mrs. Randall came by this extreme parsimony naturally.  They were both children of the Depression.  He grew up on a marginal ranch in Texas and the family scratched a living out of a few dry acres of corn, fruit trees, and pigs. 

She was from a poor family from Trenton who ate no better than the relatives who had stayed behind in Greece. Through enterprise and good fortune they both made their way out of the Depression and left penury and economic struggle behind.  However, their particular sense of value, formed and annealed in the 30s, never left.  No matter how much money was in the bank – or in their case in banks from Barrow to Fort Myers – the Depression mentality kept its grip.

My parents came from similarly difficult backgrounds.  My father grew up in the Italian ghetto of New Haven.  His father was a laborer in a factory and his mother did housework for university families. My mother’s family was little better off.  My grandfather was a cobbler who eventually opened a small shop on Wooster Square.  Like the Randalls, through a combination of enterprise, family support, and good luck, my parents made it intact out of the ghetto and the Depression. Their view of money, however, could not have been more different.  Money was to be spent and enjoyed.  What was the point of having made it out of poverty and substandard living if you could not have the things that money could buy?  Cost comparison – the byword and financial ethos of the Randall family – was for coupon-clippers and shoppers at store basement sales. 

If you wanted a Cadillac, you walked into the showroom, pointed to the car you wanted, and wrote a check. 

Plumbers, electricians, roofers, gutter-cleaners, mechanics, and handymen were there for a purpose – to fix things that broke.  Why would anyone climb a ladder and ream the downspouts when Bradley Bros. came at a day’s notice?  Why scrub toilets, wax floors, and iron shirts when Mrs. Rudzinski would do it for a few dollars a week?  Money had no intrinsic value, only relative value. Opportunity cost and ascribed value were the only factors in financial transactions. Golf, the country club, and a house at the shore were of far more value than the drawdown on my father’s account at the New Brighton National Bank.

People are defined by their approach to money more than anything else. Valuation reflects background, culture, personal philosophy, and the luck of the draw.  How we spend is what we are.

I have a friend who finally bought a new car after a lifetime of used clunkers.  His wife, cut from the same cloth as the Randalls, felt that there was no value at all in a new car.  If you bought carefully – i.e. canvassing three metropolitan counties and checking out a hundred cars in the want ads – and were willing to put up with the occasional breakdown and the repairs necessary with high mileage, you could do well.  In fact, it would be stupid to do otherwise.  As they grew older and better off, my friend and his wife moved up the used car ladder.  Instead of beaters with 100k on the clock, they opted for cars with half that, but still calculated depreciation, longevity, reputation, and estimated miles to be driven before making a final decision.  They of course discovered the usual used car bent frames, quirky brakes, and other anomalies hidden at the time of sale, but still felt the trips to the mechanic were worth it.

“What changed her mind?”, I asked.  Why had his wife finally decided to buy a new car?

“She read The Death of Ivan Ilyich”, he replied.  

I knew exactly what he meant.  Ivan, in Tolstoy’s chilling short story, is a very practical and disciplined man who has arranged his life to maintain order and predictability.  Everything in its place, fit into bookshelves, cupboards, and closets; all life a matter of accounting and regularity. When he becomes terminally ill, the news is all the more unsettling because he thought that by elaborately structuring his life, death would never come.  As he finally comes to accept his fate and the end of his life, he relaxes.  There is no longer any point in struggling to make a point, to agonize about past decisions, to wonder about the morality or immorality of his actions. 

“In other words”, he said, “We will never outlive a brand new 2014 Camry SE, no matter how badly we treat it.”

It was time to think about more serious matters than carburetors, brake linings, and tire rotation.  His wife’s sense of valuation had changed, my friend said, and she began to wonder, like Ivan Ilyich, if she had missed something; if her life of absolute value had limited her vision and her opportunities.

There are many lessons that parents want to teach their children – moral rectitude, knowing right from wrong, respect for others, ambition, intellect, and discipline among them – but the one I emphasized above all others was relative valuation.  Nothing has intrinsic value, and price is is always related to far more than financial factors.  A $500 meal at a top restaurant is worth it if the food and the experience is unique and special on levels of taste, presentation, ambience, and cadre.  It is not, then, an expensive meal.  The value of a day on the slopes of Aspen, eight hours of skiing fresh powder in the bright sunshine, and cold, dry air of the high Rockies far outweighs the cost of the $200 lift ticket.

An unremitting focus on the absolute value of money deprives one of a day at Aspen, a 5-course meal at Jean Georges, or a first edition of Wordsworth.  Cost alone should not be the criterion; and if the purchase of any of these means temperance in other areas, so be it.

Most importantly of all, such an unremitting focus is limiting and ultimately counter-productive. Except for the most disadvantaged and economically marginalized Americans, most have at least some economic discretion.  Apt valuation – calculating time, effort, and reward equally – is Buddhist in essence, for it accepts moderation as a defining principle; but is American in spirit for its understands how money makes us what we are.

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