Trying to figure out if you should spend or save

Mike Royko

November 04, 1991|By Mike Royko | Mike Royko,TRIBUNE MEDIA SERVICES

"I got a hole in my shoe," said Slats Grobnik, "but I don't know what to do about it."

What are you talking about? Your choices are simple. Get a new pair of shoes or get the old pair resoled.

"It ain't that simple."

Of course, it is, unless you want to go barefoot.

"No, I wanna do what's best for the country."

What does a hole in your shoe have to do with the well-being of this country?

"See? You never did know nothing about economics, did you? The hole in my shoe is what this recession is all about."

Your shoe?

"That's right. Ask any of them Washington economists and they'll tell you."

Why don't you tell me?

"OK. It works this way. If I go out and buy a new pair of shoes, I'm gonna be spending money on consumer stuff, right?"

Obviously.

"See, the shoe store makes a buck and the guy who measures my foot in the shoe store gets his paycheck, and the shoe company makes a buck and can pay the workers and some of it goes to other guys who make the shoelaces and the shoeboxes and ship the shoes and so on. And maybe there's even something in it for the guy who hits the poor cow on the head to get the hide to make my shoe. That's what these economists call the Good Times Charlie effect."

I've never heard of that, but I'll take your word.

"See, when I buy a pair of shoes, I'm really juicing up the economy."

Yes, but it's possible your new shoes will be made in Italy, so that could reduce your fiscal impact.

"Nah, I only buy American-made shoes. If I bought Italian shoes, with those little tassles, my wife would think I'm playing around."

That's always a telltale sign.

"Anyways, that's what a lot of the Good Times Charlie money experts say I should be doing. Buying new shoes, letting my feet help get the economy revved up."

You're right. So do it. At this very moment, some shoe manufacturer might be preparing to lay off half his work force, and a store might be preparing to file for bankruptcy. All because of your tight-fistedness and indecision. And buy some new socks, while you're at it. The Dow Jones average might soar to record heights.

"Wait a minute. I just told ya' my first option. See, I don't only listen to them Good Times Charlie economists. I pay attention to what the Nickel Biters say, too."

The Nickel Biters? I have not heard of that school of economics.

"Sure you have. But not lately. They ain't been saying much. But the Nickel Biters are the ones who say that the trouble with the economy is that we don't save enough. We been Good Time Charlies for too many years. Not like the Japanese, who stash a chunk away every week, so they can buy our golf courses. So we blow our paychecks and go in hock. Then there ain't money piled up in the banks to lend to our businesses and industry. And it's not just me. It's the government, always running to Japan to borrow money, like a horseplayer to his juice man."

What does this have to do with the hole in your shoe?

"What a dummy. See, if I don't buy the shoes, and get Tony the shoemaker to put on new soles instead, then I got some extra scratch in my pocket. And I can take it to the bank and put it away. Then I'm helping the economy by being a Nickel Biter instead of a Good Time Charlie."

Then, by all means, do the right thing and put your money in the bank. Your deposit could help some industry expand, do valuable research and development, and compete in the global marketplace.

"Maybe, but I ain't sure about that, either. See, I been listening to the To Hell with Tomorrow experts, too."

I have to admit, that is an unfamiliar school of economics.

"Boy, you're out of it. That's the hottest pitch going these days. See, even if I want to save, there's no percentage in it. The banks ain't paying enough interest for me to keep up with inflation. And the White House wants to shove down the juice rates even more, so everybody will go into hock and buy stuff. So if the banks are playing low-ball on what they pay me in interest, why should I save? I might as well be a Good Time Charlie, right?"

But you don't want to get into debt, do you? Remember, it was massive, mindless borrowing that made the '80s a financial debacle. And you should heed the words of Shakespeare.

"He talked about a hole in his shoe?"

No, but he said: "Neither a borrower, nor a lender be."

"Shakespeare said that?"

Yes, and no greater writer ever lived.

"Now I know why Ronald Reagan never played Hamlet."

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