We Need To Bring Back Losing
Jan 5th, 2010 | 18 responses
The past year or so has been very difficult on our society as millions of people have lost jobs or seen their retirement plans go bust. Obviously I have nothing but the deepest sympathy for those who have suffered. In my work I often see people who are on the clear downswing of their financial lives.
Yet in the past few weeks I have seen two very different reactions. I am certainly not suggesting that these reactions are typical of the groups the individuals represented but I do think the two reactions are quite telling.
The first came from a younger client, in his mid to late 20′s who had graduated from college and started working at a high paying job right out of school. He and his girlfriend had travelled as they wanted, bought a nice house, etc. In general they’d had the dream life from the start.
Then as the economy slumped he lost his job and couldn’t find a new one. In discussing this problem with me he seemed almost mystified that there wasn’t just a new job waiting for him. Now facing the probable loss of his home he wanted to know if there was some legal way of getting rid of his mortgage while still keeping his house. When I told him this was not possible he wanted to know ‘why hasn’t the government done something to solve this problem’.
The second client was older, in his late 40′s or early 50′s. He had also gone to college but when he graduated he started out at an entry level job and had worked his way up. He also had been laid off and due to his age the chances of a new job with similar wages were slim at best. He was also facing a loss of much of his retirement savings and he was in danger of losing his house.
In short his situation was probably worse than my first client because he didn’t have a lifetime to earn everything that he had lost back. If he loses his house the odds are he’ll never own one again. He will also have less of a chance of rebuilding his retirement.
Obviously he was not happy with the situation but he was much more reflective about things. He almost seemed embarassed to be doing the bankruptcy and expressed dismay at not paying his creditors. When I assured him that the laws were designed to help people and that it wasn’t his fault he was in trouble he was comforted somewhat but he still did not seem happy.
I related to him that I had other clients, often much younger, who were far more bitter and yet had more of a chance of rebuilding their lives. His response was a simple one. He said ‘we need to bring back the idea that losing is ok’.
It wasn’t that he was happy about his situation or that he felt it was fair. But he did have the once common attitude that you don’t win every game and sometimes bad things happen. Sadly that seems to be an increasingly uncommon attitude in a world where everybody gets a trophy, everybody gets an A in school, nobody fails. In listening to the man discuss how he was willing to accept the real world and move on I was quite impressed.
In looking at society as a whole I am increasingly concerned that the ‘nobody should ever fail’ attitude is becoming far to common. When you look at the mortgage mess there are many people who face the loss of their homes. You see investors who face the loss of their investment in mortgage backed securities. All of these things are bad but that doesn’t mean they should not happen.
People bought houses knowing they might not be able to afford them but hoping the value would go up. Investors in the securities did the same, investing in a product and hoping that the investment would grow. They took a gamble and they lost. Had the value of the homes gone up the buyers certainly would not have given the bank more money, nor should they have. They took the risk so they deserved the reward. But they also must accept the risk of loss.
Yet to listen to Washington these days the attitude seems to be that we have to somehow protect the homeowner, protect the investor and make sure nobody loses anything. The same holds true for the investment houses and banks who took risks and lost. We seem to be telling them that they can gamble and if they lose we will bail them out.
Again, I do not wish to diminish the losses people have suffered but the fact is people have lost and failed from the beginning of time. My life is pretty good but there are certainly things that I don’t like about it and there have been plenty of losses. I’m willing to bet the same is true for most of you. We managed to move beyond the losses and I think it’s time we recognize that this is how society works.
18 Responses to “We Need To Bring Back Losing”
Word
3 factors at play here:
1) 30 plus years of drumming the “Winning isn't everything, it's the only thing” into people's heads.
2) The fact that losing is so expensive, loss of house, health insurance, retirement, etc… The cost of our Social Darwinist contract.
3) The fact that the people who have run America into the ground through their short sighted greed and stupidity walk away from their fuck-ups with multiple million dollar golden parachutes.
Nice essay, but the problem just doesn't extend to homeowners and investment banks, it extends to the governments that believe they can spend as much as they want and the bill will never come due. California will soon come hat in hand to the federal government – do we bail them out and let them avoid the consequences of their stupidity?
The federal government of course has no one to come to with hat in hand except the taxpayers.
Things sure have changed since Ford refused to bail out NYC in 1975. As people keep saying, “Thirty years in the making . . . “
Good points Patrick. Anyone who ever played sports knows that both teams don't win, and anyone who has lived in the world working to achieve what they have realizes it doesn't just automatically happen without a certain amount of sacrifrice. That said, the unrealistic attitudes some people have do seem to be supported by some of the “role models” we see in society… Don Q's number 3 for example. A dumbed down media full of reality shows and other general 24/7 idiocy doesn't help either. Not too many messages out there about real reality.
You can say the same thing in the 1920s and 1970s. It doesn't change the fact that s— happens and we need to toughen up. This is coming from an uninsured, 40 year old who lives with her mother. I've survived divorce, mental illness, chronic back pain, and bankruptcy. But now I have a great job, great boyfriend, and plenty of scar tissue. And I have it easy compared to people I know and probably some of y'all
Haven't we all been taught that if we work hard and play by the rules things should work out for us? But it isn't true and it never has been. And I have to say that given what happened to the bankruptcy laws a few years back I found your comment about the law being designed to help people mildly humorous, in a dark comedy kind of way.
OK, I accept the premise that when one gambles, or hopes for continuing prosperity, one assumes the risk of loss.
But, it seems to me that the groundswell of anger has less to do with risk of loss than with how the risk is spread. If loss falls on one class, working and middle class families, while no loss accrues to banks and investment firms, there is a sense that the system is skewed in favor of corporate wealth. They are “too big to fail”, but no one cares if “my” family or small business goes under.
That sense of unfairness is compounded by the, as yet unkept, promise that bailing out those “too big to fail” will trickle down to main street and help families and small businesses facing financial disaster.
To this extent I disagree with conclusion of the article. It is not an inate inability to accept the risk and consequences of failure, it is the fundamental unfairness with which the risk has been spread.
tidbits,
You two are talking about different things. You are talking about why so many people are angry about the bailouts. He is talking about the entitlement mentality a lot of well off people have. The wallstreet bankers and AIG execs feel, like the young man he spoke of, they should have been bailed out. They think the poor deserve to be poor and they deserve to be rich. They think because they are smart, educated, of a certain social class, and played by the rules and it doesn't possibly make sense that they could fail. They don't accept responsibility for their part in the crisis. I would dearly love for them to learn how to lose.
Zzzzz,
Perhpas I wasn't clear in my prior comment. It was not my intent to talk about anger about bailouts, but rather the sense of unfairness that some bear the risk while others do not. If two people sit down at a roulette table and both lose, but the casino takes the money from one, and gives back the money to the other, the person whose money was taken will feel cheated…treated unfairly.
There is an inter-relation between the uber-rich having their cake and eating it too and the level of frustration felt by mainstreet Americans who have neither cake nor the opportunity to eat (obvious hyperbole). In other words, if everyone was paying the price of the failure, the attitude of entitlement might not be so prevalent. But, when you see one class receiving entitlement and you don't, it does give rise to anger. Loss would, in my view, be far easier for all to accept if all bore the loss in equal measure. It's not about bailouts, it's about fairness… egalitarian policy vs. oligarchical policy.
“rather the sense of unfairness that some bear the risk while others do not”
Actually, you're onto something here, though you're expressing it in a lefty-style fashion that tends to attribute far too much to luck and risk and far too little, as a rule, to individual decisions and efforts.
It's actually a broader view than just “risk” (of loss) — it's a sense that it often is a rigged game everyone is playing, with different rules for different players.
I agree. The entitlement mentality needs to go away and permanently. We need to get away from the idea that society owes us anything. Indeed, when society takes care of the needy, it should do so only for so long as it needs to until people can get back on their feet. We are not owed anything. We must do for ourselves and expect the government to help only when we can't do it on our own. Your client, Patrick, is correct. It is time to bring back losing.
DLS – “It's actually a broader view than just “risk” (of loss) — it's a sense that it often is a rigged game everyone is playing, with different rules for different players.”
I accept your subtle, but subversive, lefty addition to my lefty comment.
tidbits
“I accept your subtle, but subversive, lefty addition to my lefty comment.”
Well, it's accurate, isn't it? “Four legs, good, two legs better,” too, among the bankers these days.
P.S. I've been on the road already since relocating again in the West. Phoenix has indeed seen some changes. Ben Avery (the shooting range) appears more endangered than ever with the approaching development (from multiple directions), and the related stretch of I-17 looks rebuilt in the same way as the stretch of I-15 between Barstow and (ballooning) Victorville in California. Back to subject at hand: How many of the homeowners in the new developments there are ready to walk away from the homes and the mortgages and the bankers, as is the guy around Mesa (elsewhere in PHX) who was on the news before?
DLS, my stalwart friend and occasional nemisis,
Congratulations on your relocation to God's country and your timely escape from Detroit.
Being an uppity Scottsdale-ite, I know little of the lowlife issues of Phoenix, though I do slum about a bit at the cowboy/biker bars of Cave Creek. To answer your question, homeowners, in new developments and old, are walking away from their mortgages. Many, foolishly believing the real estate boom was something other than a bubble, took out their “equity”, thereby indenturing themselves to the banks in '04-'06. Now, so far underwater that they would die of the bends even with scuba gear, they are walking away in droves. As a result, appraisal comps include short sales and foreclosure sales galore, driving property values down even further. Thank God I'm a die hard conservative who never bought into the nonsense of the real estate debacle and can proceed with actual equity with no fear of having to learn how to swim underwater.
Beyond that, I got in line at Albertson's the other day behind a man openly carrying, which should warm the cockles of your heart. No one else would get in the same line which provided me with exceptionally quick and efficient service.
“Congratulations on your relocation to God's country and your timely escape from Detroit.”
I miss the grass and trees, still. That and one or two other things come from being Easternized over a full decade.
“I got in line at Albertson's the other day behind a man openly carrying”
Just like in the car wash on Bell Road west of I-17, or the Burger King one time off the 101, ten years ago…
As to the walking-away crowd, well, I am short of time, but one guy I met in Atlanta (a walking encyclopedia, whom I may proudly boast I forced to stop and think hard about something when I chose to challenge him once) was similar. He was in Texas during the bust then and there, and just handed the keys to his house to the bank and departed Texas for Georgia.
OK — I have a tiny amount of extra time…
“Now, so far underwater that they would die of the bends even with scuba gear, they are walking away in droves. As a result, appraisal comps include short sales and foreclosure sales galore, driving property values down even further.”
I suspect we haven't seen an end to this. This is before the credit card reckoning and before and end to things like unemployment insurance (and related things that were propped up or extended briefly by the “stimulus” spending last year, something only transitory and never intended to be permanent or long-term).
I don't believe the walkers-away should be able to get away with it without serious problems. I don't decry the lowering of home values, which remain bloated even now. Homes are a place to live and shouldn't have this function disrupted by becoming overpriced speculative ventures instead.
“driving property values down even further”
So the tax (millage) rates get raised, don't they? At least, that's what happens in other places. [scowl]
(related side note: I have always advocated bypassing this assessed valuation and related tax nonsense elegantly, by going to an area [square footage, etc.]-based tax system instead)