It has been my experience people tend to have some of the same basic needs. They must be fed, clothed, housed and shod. Or as my father told my sister and me on much more than one occasion: “clothes on your back, roof over your head and food in your mouth.” We typically had this discussion after one of us expressed a longing for some sort of non-essential item, or at least what he considered a non-essential.
My mother simply said she didn’t care what Mrs. Else and her child Everybody had or did.
However, outside of the aforementioned, I am not sure we can truly agree on what is a necessity and what isn’t. Perhaps we could debate some form of healthcare. Other that and clean water, what is it we all actually need to fundamentally survive? All of us sentient bipeds across this entire planet?
I suppose that is what is so nice about capitalism. We get to decide what we think we need, and not some central planner somewhere. As a result, the definitions of ‘nice to have’ and ‘need to have’ seem to vary significantly between individuals and generations, at least here in the United States.
What’s more, my distinction between necessity, luxury and ‘waste of money’ has changed dramatically as I have gotten older. I am sure it has for others reading this newsletter, too.
Think about it. What was a basic need of yours when you were a teenager? For me, I probably would have said something silly like red-tab Levi’s jeans, arcade video games and cassette tapes. At least that is how I spent what little money I had. I also used to love those Dolly Madison fruit pies. My favorite was apple, the one with Linus van Pelt on the wrapper.
Clearly, these things aren’t necessities to me today. In fact, I would call them a complete waste of money. Shoot. Do they even make some of those things any longer? Further, if your reminisce about taking a ‘fistful’ of quarters to the video arcade at the shopping mall, well, your AARP card is in the mail.
Here is why I bring this up: it is easy for Baby Boomers and Gen Xers to look at Millennials and Gen Zers and tell them to quit whining about “affordability.” There probably isn’t a single person over 50 who hasn’t thought the ‘younger generations’ wouldn’t have a problem with ‘affordability’ if they didn’t spend their money on, say, $5 coffees and what have you.
In fact, I have had that specific conversation with my daughter on more than one occasion. Upon typing that sentence, I realized how much I must sound to her as my father did to me.
To be sure, I am not confident as to what constitutes ‘a necessity’ for younger people these days. It would appear they eat at restaurants more than I did when I was younger. They tend to drive nicer cars, or so it would seem. Many also appear drink better booze than I did back in the day. That $5 coffee I just mentioned? That wasn’t a thing, at least not that I knew about.
However, I rarely wax nostalgic about not going to restaurants, driving beaters and drinking the cheap stuff. In fact, I never do so. Also, I happen to like a nice cup of coffee, as is evidenced by my Nespresso machine. Now, THERE is a necessity for you.
But what of a smartphone? Those are pretty expensive, from top to bottom, and they simply didn’t exist when I was in my teens and twenties. The Internet wasn’t really a thing for the average consumer, with the exception of perhaps Al Gore, until the mid to late1990s. As such, my family didn’t have a computer in the house when I was growing up. Streaming services? Apps? They didn’t exist.
You mean, I have to buy a membership to use the carwash? What in the world? I used to be able to get one for free with the purchase of a tank of $2/gallon gasoline.
In truth, there are a lot of things which are basically necessities today which I didn’t have to worry about when I was coming out of college. Each one separately might not break the bank, however, when combined, young people today have a lot of experiences I didn’t have.
But…but… the expensive coffees, restaurants, concert tickets and travel! What about all of that stuff? Surely, they would be better off financially if they didn’t blow their money on those non-necessities.
A ha. There is the rub. What might be a waste of money to you and me may not be for someone who is 25 or 30. You know what? Our parents used to say similar stuff about us, or at least mine did.
My parents didn’t go out to bars and restaurants anywhere near as frequently as we did in our 20s. Not even close. They entertained at home, played bridge and whatnot. To that end, I distinctly remember my folks marveling at how we used to ‘go out’ to hang out with friends, when it would have been so much better, and cheaper, to just have folks over.
Further, if you were born prior to, say, 1970, think about all the things we now take for granted which were luxuries for our grandparents. Two or more automobiles in the driveway? More than 2 bathrooms in the house? Air conditioning? All the clothing we have? All the electronics? A large, color television in every room, one which you can actually carry? Do you think your grandparents would think huge, wholesale ‘clubs’ are really necessary? What about e-tailing? Where you can purchase just about anything you can imagine and have it arrive at your house in a day or two?
The list is almost endless.
I submit our basic needs haven’t changed very much over the centuries. You know, the basics: food, clothes, shelter and, arguably, shoes. However, the baseline for what is acceptable increases with each generation. To that end, the poorest in our society today has access to goods and services which Louis XIV couldn’t have dreamed of having.
So, when you start throwing shade about $5 coffees and what have you, remember all the times your folks threw you shade for wanting, no needing, something they didn’t think was necessary. For me, it might have been several pairs of red-tab Levi’s, a couple of AC/DC cassettes or an Orange Julius. They probably didn’t understand why we ate so much fast food when we could have just made a sandwich at the house.
All of it.
You see, the younger generations aren’t as profligate with their money as much as the definition of ‘minimum’ continues to get higher and more expensive. Their ‘must haves’ are often our ‘nice to haves.’
Yeah, I think that works. You know, it probably works for Mrs. Else and her child Everybody too.
Thank you for your continued support. As always, I hope this newsletter finds you and your family well. May your blessings outweigh your sorrows on this and every day. Also, please be sure to tune into our podcast, Trading Perspectives, which is available on every platform.
Chief Economist
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