Broke and in Debt? Join the Club
Neal Gabler is a writer of some prominence. You may have heard of his Walt Disney biography, just one of several award-winning books, but one that many consider definitive. Or of his television career spanning several decades, including a stint as a co-host of a popular PBS program. Or perhaps you knew that he taught writing at the University of Michigan and Penn State, and has had appointments at USC and Harvard.
When it comes to success as a writer, Gabler would be considered to be among the so-called “one percent.” And good for him.
Perhaps not so good, however, is his admission last year, in a cover story in The Atlantic, that he’s broke. Indeed, Gabler admits that if he were forced to come up with $400 for an unforeseen emergency, he would not be able to come up with the money (absent borrowing or selling something). As bad as that sounds, Gabler takes solace in the fact that he is in good company. According to a Federal Reserve survey of financial security, some 47 percent of Americans would have the same problem.
In Gabler’s case, his situation has lead him to embrace unpleasantness. A successful writer with a much better-than-average income — to say nothing of an impressive stock of human capital — Gabler nonetheless:
- has juggled creditors to make it through a week,
- forced others to pay him so he could pay others,
- had liens slapped on his bank accounts,
- subsisted on a diet of eggs for days while waiting for his next paycheck to arrive,
- and borrowed money from his kids to buy heating oil.
So Gabler’s financial struggles have forced him to break bad in ways one would not associate with a writer of his level of success. While he says he isn’t writing for sympathy, he is writing so that the many millions who might read his article would know they are far from alone.
And yet: sympathy was never one of my reactions to his plight. I know families much poorer than Gabler’s who manage to make ends meet. The difference is that, unlike Gabler, they don’t live in the Hamptons, send their children to expensive private schools, or assume credit card debt.
They even save.
Living in New York the City, and even New York the State, is out-of-the-question for people of their means. In fact, many of them escaped from places like New York and California for new lives in the Sun Belt, where lower taxes and regulations translated into not only better economic opportunities, but also increased purchasing power, personal freedom, and quality of life. (Curses on New York and California politicians who would stem this tide by forcing the same regulatory and tax regimes on freer states.)
Gabler gets that he has made poor choices in his life, and even admits to being “a financial illiterate, or worse — an ignoramus.” But then he adds:
I don’t offer that as an excuse, just as a fact. I made choices without thinking through the financial implications — in part because I didn’t know about those implications, and in part because I assumed I would always overcome any adversity, should it arrive. I chose to become a writer, which is a financially perilous profession, rather than do something more lucrative. I chose to live in New York rather than in a place with a lower cost of living. I chose to have two children. I chose to write long books that required years of work, even though my advances would be stretched to the breaking point and, it turned out, beyond. … [T]hese are the choices that define who we are. We don’t make them with our financial well-being in mind, though maybe we should. We make them with our lives in mind. The alternative is to be another person.
The problem is that Gabler’s choices, which have defined his life, have created stress, uncertainty, and fear, leading to feelings of impotence about ever being able to make things right. I picture him at his keyboard in a grainy music video, singing “16 books and whuddia get? Another day older and deeper in debt.”
Gabler gets an Austrian insight, even if he hasn’t yet come across the word praxeology in his writing career, and that is man acts purposefully to alleviate or reduce any state of felt uneasiness. As Mises argues in Human Action,
While all other animals are unconditionally driven by the impulse to preserve their own lives and by the impulse of proliferation, man has the power to master even these impulses. He can control both his sexual desires and his will to live. He can give up his life when the conditions under which alone he could preserve it seem intolerable. Man is capable of dying for a cause or of committing suicide. To live is for man the outcome of a choice, of a judgment of value.
Gabler would also agree with Mises (from Theory and History) that “[c]hoosing ultimate ends is a personal, subjective, individual affair. Choosing means is a matter of reason, choosing ultimate ends a matter of the soul and the will.”
You’re right, Neal. Our choices define our lives and make us human. But it is important that our choices are grounded in truth. It’s just that your choices seem to have left him one paycheck away from a debtor’s prison.
One can imagine a world in which Gabler pursues his writing vocation with higher interest rate, presuming that market rates are significantly higher than the ones he has faced for his adult life. In such a situation, debt would not have been as easy for him to acquire. Meanwhile, the lack of new money swashing around the economy — the goal of lower-than-market rates — would not have bid up housing prices to the extent that they have.
Who knows? Maybe higher rates would have induced him to save while the resulting increase in the capital stock might have resulted in an increase in housing supply and reduced housing prices. In the end, he may still have ended living in his beloved East End of Long Island.
The fact is that there are many Gablers out there in increasing numbers as near-zero short-term rates near their 10th anniversary. The damage will linger for generations whether or not market rates reassert themselves. Until then, Gabler should live within his means, and instead of not asking for our sympathy, start directing his ire toward those institutions that made his plight likely.