Robust Thrift

Thrift doesn’t start with seeking sales and clipping coupons, but with a character of contentment.

Disasters strike, both in nations and in families. Hurricanes happen, jobs are lost, and terrorists crash airliners into buildings. Our first reaction is disbelief and disorientation. On 9/11/2001 many Americans spent the day staring at the television, unable to accept that such an attack happened in the USA and uncertain of what the attack meant for our future. On any day, when a family member is diagnosed with terminal cancer, a friend dies in an accident, or a husband loses his job, our normal reaction is stunned silence, fear, sadness, and stunned silence again.

Our second reaction depends on the individual. Some people sink into despair, others begin frenzied work, and still others lash out at whoever or whatever they think is responsible for their pain. Over time, those who are psychologically healthy transform their hardship into a new way of looking at the world, adjust their actions, and resume a normal if inexorably altered life. Those who cannot end up getting help from health care providers and ministers to help them reassemble the pieces of their shattered soul.

Robust Thrift

One of the best ways to live life and to handle disaster, is thrift – using resources (money, possessions, and time) carefully and avoiding waste. Though not valued in convenience-focused, image-obsessed America, thrift enables individuals, families, communities, and nations to weather the storms of life. Robust Thrift, thrift that comes from strength of character rather than just a desire to save money, is best. It forces us to focus on what is truly important, teaches us that we can live joyfully with far fewer things than we think we need, and provides the freedom of greater control over our lives. Ultimately, disengaging our happiness from our desire for things makes us free. Robust Thrift, is not merely about actions – it is about attitudes, and ultimately character. There are three major character traits associated with Robust Thrift – Humility, Security, and Godliness.

The first kind of thrift is financial, and most articles and books on thrift focus here. They discuss coupons, bargain hunting, and haggling. Most of this advice is useful, but limited, because it doesn’t address the underlying attitudes and belief systems. Robust thrift in financial matters is an outgrowth of humility, a self-forgetfulness that focuses its attention on God and others.

Vendors make mountains of money catering to our vanity. The woman who boasts of her ability to get a “great deal” will often spend more money than she should simply to get more “great deals” that she can then brag about. Photographers, venue operators, caterers, florists, and decorators gouge brides and families who want their wedding to be more grand and glorious than those of their friends. Automakers sell the image – tough and individualistic, sleek and sporty, or trendy and socially conscious – far more than they sell the car. Clipping coupons is no cure for the vanity that besets us, and there is no financial thrift without humility.

The second kind of thrift deals with possessions. We fill drawers, closets, attics, basements, garages, and storage units with things that cost us money to buy, money to store, money to maintain, money to move, money to protect, and money to dispose of. Our surfeits of stuff also take time to buy, time to store, time to maintain, time to move, time to protect, and time to dispose of. We get food that we don’t like to fill our pantry just because it is “on sale”, and collect trinkets that we don’t need because they are “free”. Shelves in book stores and libraries groan under the weight of tomes telling us how to declutter our lives, but we rarely do it. Why? Because we mistake possessions for security. Some belongings such as a shelter, food, and clothing contribute to our security, but most, like the 27th key chain that we got free at the trade show but can’t bear to part with, do not. Those who find security in something other than possessions will find that their thriftiness is robust – it can weather the storms of life.

The third kind of thrift deals with time. Time is our most precious possession, and armies of authors wielding quills, pens, or keyboards tell us how to use ours. Despite their best intentions and advice, we waste vast amounts of time. Why? Because we do not know who we are, and what we are supposed to do. A young man graduates from college and faces a bewildering array of possible careers, possible pastimes, and even possible wives. Paralyzed with choices, and never having taken the time to discover who is he, who God is, and what He has created him to do, the man takes whatever opportunity is easiest. Without knowing our Maker, the One who created us to do a specific task as we have created saws to cut wood, we cannot do otherwise. Robust thrift with our time is rooted in glorifying and enjoying God, and allowing Him to direct our steps.


Thrift is a good thing – we could all stand to take better care of our resources. But thrift is ultimately a matter of the heart. Robust Thrift moderates our money with humility, purges our possessions with security, and targets our time with Godliness. When hurricanes happen, jobs vanish, and terrorists attack, Robust Thrift will help us overcome adversity every day.

The Year in Business, Educational and Financial History

7 Jan – The first commercial bank in the United States, the Bank of North America, opened for business (1782).

16 Jan – The Pope appointed the Medici family as the official bankers of the Papacy (1412).

8 Feb – The NASDAQ, originally the National Association of Securities Dealers Automated Quotations, started business (1971).

23 Feb – The first US mill converting cotton to cloth was founded in Waltham, MA, inaugurating the expansion of the US textile industry (1813).

8 Mar – The New York Stock Exchange was founded (1817).

25 Mar – Member states West Germany, France, Italy, Belgium, Netherlands and Luxembourg formed the European Economic Community (1957).

1 May – The Wedgwood Pottery Company, one of the most famous firms in British history, was founded by Josiah Wedgwood (1759).

2 May – English King Charles II approved the Charter of the Hudson Bay Company, opening up exploration, trade and settlement in the region (1670).

3 May – The oldest institution of higher education in modern Greece, the University of Athens, was founded in Athens, Greece (1837).

4 May – During a labor demonstration in Haymarket Square, Chicago, an unknown assailant threw dynamite at police, killing seven police officers and four civilians and injuring scores more (1886).

16 Jun – The Ford Motor Company under founder Henry Ford was incorporated (1903).

23 Jul – The Ford Motor Company sold its first car (1903).

8 Sep – Harvard College, originally called the College at New Town, was established by vote of the Great and General Court of the Massachusetts Bay Colony (1636).

19 Oct – On Black Monday, stock markets beginning in Hong Kong, spreading through Europe and into the United States, plummeted (1987). The US Dow Jones industrial average (DJIA) dropped almost 23%.

24 Oct – On Black Thursday, the US stock market collapsed, spreading financial instability worldwide and initiating the Great Depression (1929).

11 Nov – The Virginia Military Institute was founded in Lexington, Virginia (1839).

28 Nov – After closing for the opening months of World War I, the New York Stock Exchange reopened (1914).

29 Nov – The Atari company released Pong, the first commercially successful video game (1972).

3 Dec – The German Customs Union established the first periodic census in Germany (1834).

27 Dec – 29 nations signed the agreement creating the World Bank and the International Monetary Fund (1945).

The Financial Crisis and the Concentration of Financial Power

One of the most troubling realizations during the financial meltdown of 2008 was that some companies were “too big to fail”. Chrysler and General Motors were “too big to fail” because of their strategic importance to American industry and because of the thousands of jobs that would be lost if they collapsed. So they received billions in taxpayer money. Remarkably, Ford Motor Company, just as big, in the same industry, the same environment and also threatening thousands of jobs, did not need government assistance.

Big financial companies, including Bank of America, Goldman Sachs, Morgan Stanley, Merrill Lynch, Bear Sterns, Wachovia, American International Group, and others were also considered too big to fail. The fear was that if they failed, so much confidence would be lost in the financial system that markets would implode. As a result the Bush and later Obama administrations did some legal ledgermain to merge companies and sank hundreds of billions of dollars into these entities. Individual taxpayers, home owners and account holders got a shakedown. While the blame for the crisis belongs throughout our society, from greedy lenders to irresponsible borrowers, the pain hit us all, including many who never deserved it.

The free market is built on the Darwinian principle of “survival of the fittest”; if a company can’t compete, it goes bankrupt. It may emerge from bankruptcy as a leaner, stronger version of its former self, or it may not emerge at all. Either way, in the free market no company should be too big to fail.

If a company, or any institution, cannot fail, it loses its most powerful motivator to perform. Why work hard if you can be lazy? Why save when you can spend? Why plan when someone else (like the government) will save you from any bad decisions that you, as a company, make? The Soviet Union was loaded with companies, really state enterprises, that were not allowed to fail. Instead, the nation failed. Communist China had the same state-run companies but did not go the way of the Soviets. Instead, it opened up the market, at least partially. Many companies failed but others adapted to the new reality and succeeded. Today China has the second biggest economy in the world. “Creative destruction” has always been a fundamental principle of the free market.

Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010 to try to prevent the 2008 Financial Crisis from ever happening again. Whatever one’s opinion of the law, however, financial services and investment dollars are still highly concentrated and the financial system is still vulnerable. No one believes that regulation alone can protect America from another financial crisis.

While many financial institutions stumbled into the morass, some flew above the pit. USAA, a member-run insurance and banking company, retained its AAA credit rating throughout the crisis (at least until Standard and Poor downgraded the United States Treasuries to AA+ in 2011, and all US companies were downgraded by default). Credits unions also did better than commercial banks, with three times as many banks than credit unions failing in 2008. In 2010, almost five times as many commercial banks failed ( Employee run pension funds and other cooperative arrangements were similar. Such companies typically have a more conservative investment strategy, provide better customer service, and are more responsive to their stakeholders.

It is difficult to identify exactly why these institutions and others like them succeeded when others failed, but we can gain some insight by considering the major difference between them and the commercial banks. Commercial banks and other publicly traded companies are often controlled by people who do not have large amounts of their personal wealth in the company. Credit unions, mutual banks, and other financial organizations such as USAA are owned and operated by their members. Their leadership teams have financial skin in the game, while leaders of commercial banks may not. Likewise, rather than making or losing money exclusively on investments, they make money on each transaction. High transaction volume and fees, not necessarily smart investments, are their “streets of gold”. In such an environment, is it surprising that bankers spent other people’s money on investments that they didn’t understand?

This is not to imply that commercial banks, or any other company, are inherently bad. No institution is better than the people working in it. People working in the investment industry are no more stupid or wicked, than anyone else. However, they are also not smarter or more virtuous. Humans are weak and vulnerable to the temptations of fame, money, and power. When too much of these are entrusted to anyone, especially if oversight is lax, disasters happen. Like Gollum in Lord of the Rings, they can become ensnared in their “precious”, the thing that they value most, and harm themselves and others.

We often expect the government to fix our problems for us, but government can never be more powerful than its citizens. Government regulation at the federal, state and local level is important to control private sector excesses, but the best remedies are private. All companies exist to make money, including those that are “too big to fail”. Customers have the power to make any company survive, or die. If Americans want big investment companies to stop making poor investments, provide better customer service, and be more socially responsible, we need merely to invest in their competitors. The same is true for car manufacturers. As we have seen, credit unions, cooperatives, and other member-owned institutions are sound alternatives to the big banks and the big companies.

However, companies that caused problems in the past are not necessarily the ones that cause problems today. The issue is the concentration of resources, in this case, financial. Keeping wealth diffused between many organizations is good business and good policy, but only individual Americans can make it happen. Each man and woman in this country has far more influence than we realize; we simply need to be informed and deliberate in how we use it.