The New Normal (3) — Thrift, Frugality and Fasting

Thrift and frugality

An Example of Church Leadership

One of the themes of this blog is that the crises we face provide an opportunity for the church to provide leadership. We have an excellent example of such leadership here in the Commonwealth of Virginia and in the Episcopal Diocese of Virginia.

The State governor, Ralph Northam, is a physician who served as an officer in the Army Medical Corps for six years. Therefore, he understands the peril in which we find ourselves. He was one of the first governors to take aggressive action as the disease started to spread. For example, very early on he shut down the public school and college systems for the remainder of the academic year.

Our bishop, Susan Goff, has been even more assertive. She shut down virtually all church services and meetings even before Governor Northam’s action. This week she closed all church offices, even those that have only one or two people in them.

Governor Northam
Governor Northam
Bishop Susan Goff diocese of Virginia
Bishop Goff

The “New Normal”

This is the third in a series of posts to do with what the “New Normal” may look like once the COVID-19 pandemic is brought under control, and how the church may provide leadership in the coming recession (possibly depression). The first post in the series — Community — suggested that our economies will become more localized. The church, particularly those churches organized around the parish concept, can help develop such communities. The second post — No Debt — discusses the role that debt plays in our society. It suggests that, if we are indeed entering a Depression, then we may come to regard being in debt as being wrong, even immoral.

Related to the idea of avoiding debt are the concepts of thrift and frugality. I found various definitions for the those words; in this post I will use them as follows.

  • Someone is thrifty is they do not spend more money than they earn. They live within their means.
  • Someone is frugal if they spend significantly less money than they earn. They save money and buy something only when they have sufficient cash to purchase it. Frugality may involve some degree of sacrifice, as during the Lenten season. (An example of frugality is to do with the current shortage of toilet paper. A thrifty person busy only what he or she needs and uses what they have sparingly. A frugal person uses newspaper. It is not as comfortable, neither is it flushable, but it works.)

Thrift, thrift, Horatio. The funeral baked meats did coldly furnish forth the marriage table.

Going beyond frugality is the concept of intentional fasting, a feature of most of the world’s religions.

Jesus, full of the Holy Spirit, left the Jordan and was led by the Spirit into the wilderness, where for forty days he was tempted by the devil. He ate nothing during those days, and at the end of them he was hungry.

Luke 4:1-2

Qumran Dead Sea Scrolls
The Wilderness at Qumran — Site of the Dead Sea Scrolls

One of the lessons that this virus-induced current recession and its associated mass unemployment has taught us is the importance of having savings. It is estimated that more than half of all Americans have less than $1,000 in savings, and about a quarter of Americans have no savings at all. In some cases this lack of savings may be unavoidable. For example, if someone is chronically unemployed for health reasons then they cannot realistically save money. But one has to wonder how many of the people with such low reserves were spending money on discretionary activities such as eating in restaurants or making the payments on a late model automobile. If and when their income returns these people may decide to permanently cut back on some of this discretionary spending.

An internet story illustrates what may happen. Before the crisis one man used to go to the hairdresser twice a month to have his hair cut and trimmed. Now, with physical distancing in force, his wife cuts his hair instead. He is wondering about making this change permanent, thereby saving $40 per month.

I came across an opportunity to be thrifty a few days ago. I was clearing out a small part of our back yard that I had intentionally let go wild. What I had not anticipated was that bamboo plants, which are very invasive, would establish themselves in that area. I decided that they had to be removed before they crowded out all the other plants. Normally I would have cut them down and dumped them in the town’s recycle truck. But, at the same time as I was cutting the bamboo shoots I was also planting English peas. The peas need something to climb on, so I used the bamboo shoots as shown in the picture. Waste not, want not. (Now I have to make sure that those shoots do not put out roots and start to spread.)

Bamboo shoots used to support English peas
“Waste” bamboo shoots used to support English peas

The example of the bamboo shoots illustrates another aspect of thrift. It is not always about large programs and big gestures; it is often to do with small actions, all of which add up to make a bigger picture.

It is unfortunate that our financial systems discourage saving. Interest rates are close to zero, the stock market is erratic (to put it mildly) and bonds can be risky in a time of financial crisis. And there is always the potential for high inflation that would wipe out much of the money that was saved. After all, our governments continue to issue staggering amounts of debt with no plan as how they intend to pay it off. One way of doing so would be to through high inflation. Still, even a difficult savings environment is better than going into debt.

Last week we saw that the Bible does not forbid us from being in debt, but it does discourage the practice. So it is with thrift and frugality. These are practices to be encouraged, if only because they make the occasional lavish expenditure even more noticeable.

Why wasn’t this perfume sold and the money given to the poor? It was worth a year’s wages.

John 12:5

National Economies

The above discussion has been to do with the behavior and actions of individuals and of relatively small organizations such as the Episcopal church. But the same need for thrift, i.e., living within one’s means, applies also to national economies. In an April 2020 newspaper article The debt reckoning has finally arrived Robert Samuelson argues that nations should balance their budgets and create a surplus in normal times. Then, when a crisis such as COVID-19 hits, they can use massive debt to bring the economy back to life. But, for the last five decades, the United States government has run large deficits on the “something for nothing” philosophy — we can enjoy the benefits of government spending without needing to raise taxes to pay for those benefits. The upshot is that we do not have the financial reserves needed to pay for the sudden deficit spending needed in crises such as the one we are living through.  We have wasted our ammunition.

Opportunity for the Church

One of the themes of this blog is that the changing and rather scary times in which we are living provide an opportunity for the church to provide much-needed leadership. In this and in previous posts it is suggested that that such leadership will include the following elements,

  1. Develop and lead local communities;
  2. Discourage the use of debt; and
  3. Encourage thrift, and frugality.

We will also need a theology that matches the “New Normal”, the post-COVID-19 world.  The example I keep coming back to that of Augustine of Hippo. He and other church fathers lived at a time when the western Roman Empire was in terminal decline and society was entering a time that we now rather disparagingly refer to as the Dark Ages. In response to this long-term crisis they developed a theology based on the concept of a City of God — an eternal city that is greater than any City of Man. The theologians of our time will need to work out how faith addresses a time of resource depletion, climate change, population overshoot and long-term economic decline.

I also keep thinking of my grandfather who said that going into debt was not just a bad financial decision, it was immoral (The New Normal (2) — No Debt).  He was making a theological statement.

Industrial Safety Management

For those of you who work in industry the corona virus is having an effect as to how we all think of safety. Therefore, I have started another series of weekly posts to do with the New Normal and the discipline of Process Safety Management. The first post is The New PSM Normal (1) — Deflation.

The New Normal (2) — No Debt

U.S. National Debt 1990-2019

This is the second post in a series that discusses what the “New Normal” might look like once the COVID-19 pandemic is brought under control. In the first post — The New Normal (1) – Community — I suggested that our economies are likely to become more localized and our supply chains shorter. Should that turn out to be the case then the Church has an opportunity to provide leadership, particularly those churches that are organized around the parish principle.

In this post I would like to consider the issue of debt. My grandfather and his family suffered during the 1930s as the economies of the world entered what the British called the Slump and Americans call the Great Depression. It was a time of deflation, which meant that people’s income dropped, often drastically, but their mortgage payments and other debts remained. Consequently, many people in my grandfather’s generation learned to abhor debt. He felt so strongly its dangers that to him being in debt was not just a risk/reward financial decision, it was  morally wrong.

How the world has changed since his time. The chart at the head of this post shows U.S. federal debt for the last 30 years. In 1990 it was $4 trillion. By 2019 it was up to $23 trillion. What it will be by the end of the year 2020 given all the stimulus programs that are being proposed is anyone’s guess. But it is bound to be a new record — by a large margin. And it’s not just governments that have run up huge financial obligations. Individuals have bought into the same mind set; credit card debt, student debt, mortgages — the list goes on.

We are now entering a time of deflation, similar to that of the 1930s (see Church Leadership). Goods and services will be available. But, because so many people will be unemployed, there will not be sufficient money to buy those goods and services. Hence factories and service companies will cut back some more, hence more people will lose their jobs, and so on and so on. But the debts that we have taken on, both individually and as a society, will not go away. Hard times for all and bankruptcy for some lie ahead.

An additional problem is that the fractional banking system allows banks to use one asset to secure more than one loan. Each asset provides collateral for multiple loans. At a time when many loans are being called in at one time this policy means that it will not be possible to pay them all.

Even before the current crisis we were seeing problems with the effectiveness of debt. Economic growth has to be based on the growth of resources and the efficiency with which those resources are used. In recent years real growth has slowed or even stopped. Therefore, nations all over the world have responded by increasing debt levels. They are using future debt to pay today’s debt. In other words, they are using the wealth of their children to pay for their current life style. No wonder young people such as Greta Thunberg are so angry. Not only are we not paying our own bills, we are accumulating debts for our children to pay with money that they won’t have.

In a November 2018 Forbes article A Worldwide Debt Default Is A Real Possibility John Maudlin talks about the failure of ‘debt productivity’.

. . . debt is losing its ability to stimulate growth. In 2017, one dollar of non-financial debt generated only 40 cents of GDP in the US. It’s even less elsewhere. This is down from more than four dollars of growth for each dollar of debt 50 years ago.

This has seriously worsened over the last decade. China’s debt productivity dropped 42.9% between 2007 and 2017. That was the worst among major economies, but others lost ground, too. All the developed world is pushing on the same string and hoping for results.

Now, if you are used to using debt to stimulate growth, and debt loses its capacity to do so, what happens next? You guessed it: The brilliant powers-that-be add even more debt. This is classic addiction behavior. You have to keep raising the dose to get the same high.

His conclusion is that there will be what he calls a Great Reset.

. . . we will have to deal, one way or another, with the largest twin bubbles in the history of the world: global debt, especially government debt, and the even larger bubble of government promises. We are talking about debt and unfunded promises to the tune of multiple hundreds of trillions of dollars – vastly larger than global GDP.

The Bible does not tell us that being in debt is always a sin. But it does warn us about the dangers of debt and its part in the sin of worshiping money.

The rich rules over the poor, And the borrower becomes the lender’s slave.

Proverbs 22:7

No one can serve two masters. Either you will hate the one and love the other, or you will be devoted to the one and despise the other. You cannot serve both God and money.

Matthew 6:24

Maybe my grandfather was more radical than he need have been. But, it does seem to make sense that we should stay out of debt as much as we can in the coming years.

Grandfather Parker on the occasion of his Golden Wedding (50th Anniversary)
Grandfather Parker on the occasion of his Golden Wedding (50th Anniversary)