In 1878 a group of Presbyterians from Mercer, Pennsylvania, formed a gentlemen’s fishing club on an island in a vast lake in the northern reaches of Ontario, Canada. It was in the territory of the Dokis Band of the Ojibwe Nation. The original campers were men of substance as well as faith but they chose to live in tents for a six-week sojourn and to enjoy the rigours and privations that such conditions entailed.
They brought their provisions with them for the most part, including live chickens that were settled on a smaller island nearby to provide eggs and meat should their piscatorial skills prove insufficient and to vary their diets. After a few years, their ladies joined them on these aestival excursions. The location is remote to this day. There is no electricity at the camp except for a generator that runs a few hours each night. Mobile phones do not work and there is no internet access.
Cabins have replaced tents and wholesome common meals are provided in a clubhouse perched at the highest point on the island. The club has refrained from adding other amenities, such as proper paths. Navigating from cabin to cabin, or to clubhouse or boathouse, requires scrambling over rocks and boulders. This island is not wheelchair friendly.
My wife’s family has been coming here since the early days, and I tag along to the encampments when I can. I am on the island as I write this. The air is clean, the environment both peaceful and beautiful, and at night we can see the stars with great clarity as we listen to the eerie call of the loon.
My preparations for the encampment included purchasing a pair of flip-flops. Being of a frugal disposition, I bought them at Wal-Mart at a very attractive price. On this rocky island, they lasted about 35 paces before the thong on the left flip-flop gave out. Replacement flip-flops were not readily available at the local native American village. Instead a tube of Super Glue was purchased at the store to make the necessary repair. It worked.
From this remote island it is very difficult to follow the budget struggles in Washington except by listening to late-night AM radio broadcasts that crackle through the air from the most powerful transmitters in the US. As I lie awake listening to this and the menacing whine of mosquitos, I reflect again upon the dire financial straits in which my country now finds itself.
Over the years, even as the competitive position of the US has eroded and the economic growth rate has lagged, we consumers, both directly and through the government, have continued to spend at a growing pace – as if the opposite were true. Now the US finds itself overburdened with debt and struggling to maintain the standard of living of its citizens. Finally, it seems, we have reached an impasse.
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While we are Texans, the next generation will be Vermonters, not buying new things but making do on a smaller scale |
Over dinner in the clubhouse, we were discussing the life the next generation will likely lead. One member told how his mother, in the aftermath of the Great Depression, would save on bed linen. She would slice vertically down the middle of sheets that had become thin and reverse and re-sew them so that the middle would be made of the old edges and the edges of the old middle, thus prolonging the sheets’ usefulness.
Other money-saving practices, such as reversing cuffs and collars on shirts, were also described. Most modern Americans do not know one end of a Singer or Bernina from the other but sewing-machine skills can be quickly relearnt. Thus we come full circle.
Let us be honest. The economic numbers in the US and many developed countries indicate that a collapse in consumer spending must occur if the economy is to be rebalanced on both the household and the government level. There are a number of ways in which this will happen: higher taxes; high rates of inflation; a loss of borrowing capacity through default; high unemployment; and a continuing drop in hourly real wages as has already been happening for the past decade.
It does not matter which combination of these factors actually plays out. The result will be the same. Future consumers will spend far less money than those of the recent past.
We will be driving home in a few days through Ottawa, stopping to see friends in Montreal, and then traversing Vermont on the way to Boston. I love Vermont. It is a place of great beauty and its people possess a quirky frugality. One possibly apocryphal story, a rural myth perhaps, concerns a Texas rancher driving through Vermont on holiday. When the Texan saw a farmer working near the side of the road, he stopped to strike up a conversation.
“How big is your farm, sir?” he asked. “Well,” the farmer replied, “it staats by the hill ovaa thea, and continues to the brook ovaa thea, and comes up to the road hea, don’t ya know.” The Texan took this all in and commented, “You know, farmer, I have a ranch in Texas where I can drive my pick-up truck all day and still not come to the end of it.” “Ayup,” the Vermonter replied, “I had a truck like theyat once.”
The point is that while we are Texans, the next generation will be Vermonters, not buying new things but making do on a smaller scale. This is the flip-flop side of our previous excesses. Welcome to the Super Glue generation.
Lincoln Rathnam, PhD, CFA, is an investment professional based in Singapore and Boston. In a career spanning almost 30 years he has managed equity, debt and venture capital portfolios and was a pioneer investor in emerging markets in the late 1980s
