Related Words, Beliefs, Background

                Borrowing Mentality

        The Pay As You Go Approach 

bankruptcy,  financial or environmental--continued borrowing and the inability to pay the resulting financial or ecological debt leads to bankruptcy.  In seeking relief from monetary debt and associated creditors, bill collectors, etc, declaring financial insolvency and filing for bankruptcy, one is in effect seeking to walk away from a financial mess he or she (to some extent) created.  There is an environmental analog to this: Someone (usually a corporation) in the course of operating a profit making business continually generates waste, which is not immediately treated, but allowed to build up. If the corporation ceases operations and closes, it can walk away and leave behind an environmental mess. After passage in the late 1970s of  legislation, which  also established a Superfund and identified  toxic waste dump sites needing cleanup, finding American companies engaging in such environmental bankruptcy  became the exception rather than the rule. 

credit -- a monetary loan or transfer of capital from a person, business or financial institution to someone (a borrower) who needs it in order to pay for something and thus immediately enjoy its benefits or assume possession of it. Those who extend credit must trust in the borrower’s ability to repay the loan in timely fashion, and, both to compensate them for the risk they incur and build some profit into the arrangement, typically receive not only payments on the loan principal but also interest payments from the borrower based on outstanding loan principal and interest rate. A credit based financial system grew up with developing commerce spurred by the Industrial Revolution. Its spread to millions of consumers was given a boost with the invention of buying things on “the installment plan” in the early 20th century, and still a greater push years later with the proliferation of plastic credit cards.

credit score--a numerical score computed by lenders (credit card companies, banks, etc) based on a person's credit history (history of repaying debts / bills in timely fashion) and believed  to reflect the person's ability to repay future debts and gauge the risk to lenders of their extending credit to this person.

credit union--a member-owned co-operative association that accepts deposits from and loans money to its members.                      

debt bondage--someone's labor is promised as payment for a loan. In the 17th and 18th centuries, the system brought many to the New World as indentured servants.  In its most notorious modern form, a child's labor is pledged by parents as payment for debts they contract.

discounting and net present value -- these are economics terms that provide a way of comparing payments that occur at different times. For example, assuming an annual interest rate of 10%, $100 payable one year from today is worth $91 today; $100 payable two years from today is worth $83 today; $100 payable three years from today is worth $75 today, etc. The reduced value of the future dollars is the result of discounting. The example provides the net present value, which is the present value of a future stream of payments discounted to the present using the appropriate discount (interest) rate. (Note: the above example assumes that the inflation rate is zero.)

discounting the future -- doing or having (consuming) something now, rather than waiting , or rather than investing the money you would have spent and getting a high return on the investment

ecological debt -- refers to irreplaceable resources being consumed or natural cycles disrupted in an impossible or difficult to fix manner by human activities. While people today benefit from the consumption or the activity, the consequences of ecological debt incurred today will be left to future generations to deal with. Examples: hundreds or thousands of years from now people 1) might have to deal with highly radioactive nuclear waste that escapes repositories, a legacy of today’s nuclear generated electricity, 2) will no longer burn fossil fuels to power automobiles or heat homes. The fossil fuel era will be over, the vast quantity of this huge resource, that it took nature millions of years to produce, having been consumed by human beings in a brief few hundred year period; 3) will suffer through uncomfortably hot summers, contend with incredibly strong hurricanes in coastal areas, and have memories of parts of the world long ago flooded by rising sea levels -- all resulting from the global warming , a legacy of long ago massive burning of fossil fuels and associated release of its carbon dioxide gas / greenhouse effect enhancing byproduct.

envy -- painful or resentful awareness of someone who is more fortunate or enjoys some advantage

globalization -- one of those terms that means different things to different people.  Here the term is defined as the acceleration of interaction and integration among the people, businesses and governments of nations. A narrower  definition, the expansion of foreign trade and investment, refers to economic aspects of globalization.  Some build their conception of globalization around the creation of a global village brought about by advances in communications technology and capital that seemingly moves without respect for international boundaries.  Others link it to hot button terms like Americanization, corporate  capitalism, McDonaldization,  free trade, outsourcing, sweatshops, the Internet Revolution, etc.           

guilt -- an emotional state produced by knowing that one has committed a breach of conduct or violated moral standards. If one accepts society’ s version of acceptable behavior, the punishment guilt produces is self administered.

impulse control disorder -- a condition characterized by being unable to rein in impulses or resist temptation to engage in behavior known to be (or potentially be) personally risky or harmful.

instant gratification -- the thrill that comes when you immediately get a desired something. Driving this is a childish “I want that now!” force. For some, this force is powerful enough to overcome the opposing force: a rational, restraining adult attitude that questions whether the desired something is really needed and whether there is money to pay for it.

interest, deduction of--taxpayers in the United States can deduct interest they paid on home mortgages from their income and get a tax break. About half of homeowners (those with mortgages who itemize deductions) claim this deduction. On a median priced home with a 6% mortgage, instead of initially paying around $12,000 / year in interest, those in the 25% tax bracket can use this deduction and effectively save $3,000 and only pay $9,000 / year in interest.

interest rate, annual--what it costs someone to borrow a dollar (or unit of currency in general) for one year. Thus a .07 = 7 % annual interest rate means that it costs $.07 dollars to borrow 1 dollar for one year, or 7 dollars to borrow $100 for one year.

investment decisions, basis for--typically the key piece of information behind whether to invest in something or not  is whether the expected annual rate of return on the investment exceeds the annual interest rate charged for the money borrowed to make the investment or finance the project.

leverage—in an economics sense this refers to one’s ability to borrow money based on one’s wealth.  Basically the wealthier one is, the more money one can borrow—or the more assets one can control or leverage.

marginal propensity to consume -- in the economic theory behind consumer spending and disposable income, this term is defined as the fraction of an extra dollar of income that goes to purchase consumer goods.

national debt -- the amount of money that a national government owes to its creditors, who can be either its own citizens, corporations, foreign citizens, corporations or other national governments. To finance the debt -- which grows each year that expenditures exceed tax revenues -- the government sells notes, bonds, and other IOUs. By 2008, the U.S. cumulative national debt approached  $9 trillion dollars. Spread over the entire 300 million people population, the U.S. national debt was approaching  $30,000 per person!

usury -- an archaic term that refers to the lending of money and charging an interest rate for its use

Confucianism -- an ethical system / agnostic practical philosophy based on the teachings of the 6th century BC Chinese sage, Confucious. Its key teachings include: 1) Ultimately the happiness of society rests on sincere investigation that produces relevant knowledge; 2) Happy societies are built on a foundation of disciplined individuals in disciplined families; 3) Respect for and fidelity to natural obligations, most notably to parents and family, is essential. 4) The right relationship between individuals is important, one based on sympathetic “fellow feeling”, treating those subordinate to you as you would like to be treated if you were the subordinate -- ideas which provide the basis for a Confucian Golden Rule; 5) Avoiding extremes and embracing moderation --finding a Golden Mean--is important.

delaying gratification--the ability to postpone receiving some reward and control impulses pushing for instant gratification.  Those possessing this are believed to be more emotionally mature than those lacking it.

do it yourself approach--rather than pay certain professionals (carpenters, plumbers, electricians, auto mechanics, tax preparers, lawyers, etc.) self reliant people who wish to save money will do the work themselves.  Typically they begin by educating themselves as to the professional details of the task they face.    

free lunch, there is no such thing as a--refers to the belief that neither a person nor a society can truly get something for nothing: even if something appears to be free there are always hidden costs. The costs may have to be paid in the future, someplace far away, by someone else, be distributed over many people, or they may show up in another form (such as an opportunity cost, environmental cost, increased disorder, etc.)  The physical basis for this belief--which becomes a principle for ecologists and others studying closed systems--can be found in the laws of thermodynamics.  Economists link it to opportunity costs being incurred when choices are made. (If something is free, no opportunities are forfeited!)

Protestant work ethic -- an ethic based on self reliance, hard work and frugality being the path to salvation that has been important in shaping post Reformation western (especially American) society of the last five hundred years. Thus, ingrained in my people’s heads, since their earliest childhood, were sayings like “God helps those who help themselves”, “Idle hands are the devil’s workshop”, “A penny saved is a penny earned”, etc. Only recently has a consumption ethic begun to seriously compete with, some would say replace, this work ethic.

renewable resources -- natural resources which are continually being replaced or replenished by natural processes ultimately driven by solar energy. Examples include wind energy, biofuels, hydropower, forest cover, etc.  Using them to meet one's livelihood or other needs is a "pay as you go approach" when compared to meeting such needs by  "borrowing" from the limited non-renewable, fossil fuel resources.  

scarcity--a condition that exists when peoples' "wants" exceed the limited resources available to satisfy them.  The related need to decide how limited resources are allocated leads to rationing and a means for doing so.  Price is one such rationing device. People compete  for what is scarce, and in making choices incur opportunity costs.  

sweat equity--refers to an investment of time and labor in a project rather than a financial investment

thrifty (or frugal) orientation -- making do with less, saving money and resources by finding creative ways to solve practical problems and maintaining one’s current possessions, thereby improving their functional efficiency and extending their useful life.

voluntary simplicity -- a simple, typically environmentally sound and ecologically grounded, non-consumerist lifestyle that people voluntarily choose, typically for ethical, environmental or spiritual reasons