So how has this happened? Well, for one thing, it’s a lot easier not to save than it used to be. The refinement of credit rating and the relaxing of state regulations that often made it hard to extend credit has resulted in much greater access to borrowed cash than my parents had when I was born. The extent of this revolution can be exaggerated—before there were credit cards, there were store credit cards and installment plans (in the delightful Irish turn of phrase, “buying on the never-never”). But widespread credit has certainly made it somewhat easier for people to scrape by without a rainy day fund, or even any cash in their pocket at all. At least until, as we saw in 2008, the banks suddenly realize their exposure and cut back on the draw.
And as I say, people can always come up with a reason. Frequently, in my experience, that reason is a) all I want is the bare minimum decent life enjoyed by every other member of my social class and b) children. The former justification is exacerbated by the fact that we are so furtive and shame-ridden about our finances, so people often don’t realize how often our neighbors' “bare minimum decent life” is hired on credit. The latter is exacerbated by the fact that it’s hard not to want to give the best to your kids.
On the East Coast, affluent parents of bright children explain that they absolutely must live in the best possible school district, and send their kid to the most prestigious possible college. In “flyover country,” parents explain that they have to have a nice new car for the kids, because safety. Also a bevy of very expensive activities, from travel sports to marching band, because otherwise their lives will be blighted. Auto accidents are declining, and bright, motivated kids are probably going to do OK no matter where they go to school. Yet parents can convince themselves to spend near-infinite amounts seeking marginal improvements.
The problem is worst on the coasts, where those amounts really do seem to spiral towards infinity (but of course, incomes are higher there too). But it’s everywhere; people are locked in a status arms race that somehow often comes to focus on the happiness or safety of their kids.
I’m not deriding those folks, only pointing out the behavior. Because the only people who can stop the self-bankrupting arms race are the people participating in it. And the only way they can do so is to start deliberately sitting out the competition. Untold generations of human beings have lived to adulthood without the blessings of a brand-new minivan, a travel soccer trophy or a Harvard education. Modern children raised without them will probably also be fine.
Unfortunately, I’m not sure how much good it does to point this out. The truth is that your kids will care about how nice your car is, about whether they can be on travel hockey with their friends, about whether they can go to fancy schools like their friends. And if you were raised in a social class that regards any of these things as the basics of a decent life, you will feel horrible about denying them. It’s the mother of all collective action problems: If all the parents agreed at once to stop this mad arms race, everyone could breathe easy and have a more secure life. But as long as some of the parents provide those things, everyone else’s kids will want them too … and their parents will long to deliver.
Hillary Clinton named one of her books after the proverb "It takes a village to raise a child." The modern corollary is probably "It takes a village to make raising a child cost so darn much." And the village has gone mad.