Lazy Man and Money

Will Creativity and Innovation Be Stifled by the Bailout?

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SimplyForties is a 47-year old single mother of a college-aged son who is navigating her way through midlife and documenting it at SimplyForties, where she writes about personal finance, relationships, grown children, the environment and social responsibility. She lives in a small rural town in far west Texas where she tries to live a better life every day.

“We are going to see a huge deflation of innovation, creativity, and responsibility, paid for by the stimulus package, IMO.”

I recently received this Tweet from someone and I’ve been seeing versions of it a lot lately. It is not my intention to debate about the bailout. I don’t see either side winning any converts and its efficacy is something only future generations will be able to decide.

What I would like to discuss is the implication of this statement and all the others like it, which is that creativity and innovation are only fueled by economics. My understanding of the baseline of this idea is that we have a huge problem and, if we throw money at it, we will not need to figure out how to solve our problem or to avoid its reoccurrence. Be that as it may, are people only innovative and creative during an economic downturn?

I have to admit that I have argued a version of this myself when I wrote about lower gas prices being a mixed blessing. In that article I voiced my concern that falling gas prices would stifle alternative energy production. Admittedly, gas prices and the Big Three automakers notwithstanding, there are still lots of people out there working in this area.

I believe people are creative and innovative because they are creative and innovative people. They see a problem and are intrigued with trying to find a solution. I was in the IT field for many years, still am in a freelance way, and every IT person I’ve ever known has a thing for problem solving. We figure out the resolution to a problem because we have a need to do so. I’m just as driven to find a resolution for IT problems presented by friends and relatives as I am by those presented by paying clients. Being an inquisitive person, I waste countless hours in my workshop coming up with perfect solutions to a myriad of challenges; many of which I could just as easily resolve by going to the store or picking up the phone. I do it because I like to solve problems and don’t like to ask for help; not because I’m broke.

At any moment there are countless numbers of inventors in their basements or their little shops tinkering away at solutions to problems. Do they hope to strike it rich? Probably. Will they stop inventing if they do? Probably not. Dean Kamen, inventor of an all-terrain wheelchair and the first insulin pump, is a very wealthy man and yet, among other things, is currently working on a generator and a water purification system to be used in third world countries. Presumably he is inspired not by money but by the needs of others. George Eastman, founder of the Eastman Kodak Company and inventor of numerous photography related technologies, had a laboratory built in his mansion in Rochester, New York, and continued to refine photography and photographic equipment until he was in his seventies. His invention of the “Brownie”, a portable camera for children, in 1937 came well after he was a very rich man.

I’ve never read an interview about an artistic person, be they painter, dancer, writer, film maker, etc., who failed to say that it wasn’t about the money. Did they hope to make a living? Certainly. Would they do it regardless? Yes.

The idea that innovation and creativity are driven solely by economics really bothers me. Am I missing something? What do you think?

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More Bailouts… Are You Still Angry?

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I’m reading about the big three car maker bailouts and I’m not sure whether I want to laugh or cry. I think I’m leaning towards crying. I understand that car makers circulate significant money through the US economy. My question is: aren’t there a lot of businesses doing the same thing?

Are we going to see T.G.I. Fridays asking for a bailout next? Aren’t they hit hard by the falling stock prices and the economy? It’s pretty clear to me that people are going out to eat less. Why else would every restaurant want to save me money? If T.G.I. Fridays goes under, cooks and waiters will be out of business. Companies that supply Fridays with food will lose business. Surely Friday’s is deserving of some money, right?

Let’s take it to another level of absurdity. One of the first things that companies cut in the rough times is advertising. This blog is supported entirely by advertising. If there’s no advertising, I make no money. If I have no money, I don’t spend it on restaurants and other things. So, due to the poor economy should I get some bailout money? Wait a second, that’s what the economic stimulus packages amount too, isn’t it?

Maybe I’m just not very smart, but it seems like this just moves money around the United States. It doesn’t seem to bring in new outside money. The Red Sox had general manager named Lou Gorman once. Whenever he couldn’t make a trade to bring in a great player, he’d say, “You can’t rob Peter to pay Paul.” By this he meant that you always had to trade something of value to get something of value. So with these bail outs, aren’t we simply robbing a nation of tax-paying Peters to pay a few car-making Pauls? Perhaps we should focus on tourism so that we bring in dollars from external sources.

I (and I’m not the only one) have a problem with people getting a break when they make irresponsible decisions. I think it sets a bad example for one. However, I also feel that I should be able to get the similar breaks if I need them – especially if I can show that I’m making smart decisions.

So how do you feel about these bailouts? Is there an end in sight? Where does the line get drawn?

$700 Billion Bailout – Is My Money Safe?

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It seems like everyday there’s new news with bailouts and banks. Today it was that JPMorgan Chase Bought WaMu for 1.9 Billion. Naturally consumers have a lot of questions and they should have them. I’m not an expert. In fact, I’ve been distanced from the news as I’ve been halfway around the world as it was all going down. I’ll try to answer a couple of frequently asked questions you may have about the bailout-bank situation today.

Is My Money Safe At My Bank?

I would like to say yes. If you asked me 3-4 months ago, I would have undoubtedly said yes. However, now I actually have a sliver of doubt. It’s true that the Federal Deposit Insurance Corporation (FDIC) pledges to insure your money. The problem is that this insurance comes from the US government, and the government itself is largely in debt. As we’ve seen with the $700 billion dollar bailout, the government is willing to take on more debt. The problem is what happens if a lot of the bigger banks start having problems. How many billions or trillions or extra money does the government have to give people?

I would look for banks that are on solid standing. I am pretty lucky in that much of my liquid money is at Bank of America. They seem to be in much better shape with a market capitalization of 156 billion dollars. A friend of mine who has a Washington Mutual account told me today, he was withdrawing most of the money in the account. Even if the FDIC guarantees it, you don’t want to have to wait for them to make you whole. I don’t believe they are required to work quickly and while you are waiting for them there may be late fees and the like. I don’t mean to scare you, there’s probably only a .01% chance of this happening (my off the cuff estimation), but it’s still something to consider.

How Do You Feel About the $700 Billion Bailout

Many people have been asking me about how I feel about the 700 billion bailout. There’s little to feel good about. It’s like choosing between a rock and a hard place. On one hand, I see what the government is doing. If it doesn’t support the banks now, the situation will escalate and everyone will be in even worse shape than it is today.

However, I’m a bit of an idealist. I believe that those who have been responsible with their mortgages shouldn’t be penalized. This bailout penalizes all tax payers, not just the ones are have been irresponsible. We’ll eventually have to pay more taxes (likely after this election) to make America fiscally responsible again. It hurts the American dollar. I felt that personally visiting Australia last week. While the Australian dollar is still less than the American dollar, it didn’t buy nearly as much.

One of the worst parts in my opinion is that the bailout doesn’t penalize the executives who earned millions and millions while this was going down. It’s not like it was some secret and no one knew it was coming. Sites like the The Housing Bubble have been saying it for years. It was simple logic that people getting interest-only ARMs isn’t going to last. I was wrong thinking that the people who signed silly things would learn a valuable lesson and that would be the end of it.

What Can We Learn from this Bailout

The fact that the responsible people are going to pay for this is sending the wrong message to America. Why be responsible if your going to end up having to pay anyway. The other message it sends is that you can be irresponsible and the US Government will just bail you out. Doesn’t it tempt you to just skip paying taxes for a few years?

What message did it send to the companies? I read somewhere (I think The Economist) that the smaller banks weren’t going to attention of the government and hence the bailout money. However, the bigger banks, well the government can’t allow those to fail. The reading quoted one anonymous bank executive as saying that the safest plan was to acquire assets quickly to be one of those big banks.

So while I’m quite angry about the whole situation, the only thing I can think of doing about it is continue to do what I’ve been doing. I will look to to secure my own finances and build diverse income streams. At the same time, I’ll try to educate people to avoid being fiscally irresponsible in the first place. Perhaps if we all work together we can prevent this kind of mess from happening in the future. Then again, perhaps I’m too much of an idealist.