Ben saves the Economy

By D.H.T. Shippey                              Editor Michael Burns

   One man could have prevented the September Economic Crisis. One man has the answers that could fix the crisis now. That man is Ben Franklin.

   Franklin was considered a sage in his day, and he did everything he could to promote that view. He began his professional life as a poorly educated 16 year old with no money, and finished his life as one of the most respected and prosperous men in America. In 1758, Franklin decided to share his recipe for financial success with everyone and wrote The Way To Wealth. It wasn’t just the first American do it yourself book, or just a get rich book; it was a code of behavior and business ethics for a rising nation of shopkeepers, farmers, traders and artisans. The book contained advice that he had collected, implemented and refined in his already extraordinary life. Being Ben Franklin, he did not just baldly give advice.  He wrote a story. He made up a tale about a local auction of merchant’s goods, and acted as if he was merely reporting what had transpired. The people waiting for the auction were in deep conversation about the hard times they were faced with, and turned to a respected, plainly dressed, older man for his thoughts. Wise old Father Abraham dispensed his advice to the crowd, quoting whom else but Ben Franklin (Under the pseudonym Poor Richard). What is amazing is that so much of his instruction would have prevented today’s financial crisis. So here is the Ben Franklin solution in five easy parts.

Ben’s advice part 1    

“Keep thy Shop and thy shop will keep thee”.

   It seems so simple, but can you imagine what it would have been like if the CEO’s of the now collapsing financial institutions had followed this simple principal? Think of Lehman Brothers. Over 150 years of wise, ethical, and successful business, all undone by a few years of frivolous and unscrupulous dealing. Company executives trying to milk their businesses for all they could take before the bottom fell out. It’s the difference between short-term profit income growth and stability.

 

Ben’s advice part 2

“Not to oversee workmen, is to leave them your purse open. Trusting too much to others' care is the ruin of many.”

    The new buzzword from Washington DC to Wall Street is “oversight.” It’s almost as if the government forgot that they told us that they were watching and regulating this business. Now they say that they saw the danger coming, but gave no warning that the bad loan bubble was about to pop. Of course, it was our government that made it easier to get a home loan to begin with and then did not keep a watch over the work being done. Trusting too much to others’ care has now become the ruin of many.  

 

Ben’s advice part 3  

“If you would be wealthy, think of saving as well as of getting. The Indies have not made Spain rich, because her outgoes are greater than her incomes.”

We live so much in the age of extended credit that we cannot imagine life without it. Most homes in America are living well beyond their paychecks, and it has not been because of necessities. As it turns out, our financial institutions were doing the same thing. Now, not wanting to be left out, our government is planning to buy bad loans with money they don’t actually have. The simple idea of looking at your regular income and then spending less than that amount is almost shockingly revolutionary at this point in history. Our citizens live beyond our means, our financial institutions give loans to the citizens that cannot be paid back so that we can continue to live beyond our means, and the government buys the debt with funds they don’t have. Don’t worry, though--they can get the money from the citizens. Oh, wait a minute.

Ben’s advice part 4

"Away then with your expensive follies, and you will not then have so much cause to complain of bad times, heavy taxes, and chargeable families; for Buy what thou hast no need of, and ere long thou shalt sell thy necessaries.  Many a one, for the sake of finery on the back, have gone with a hungry belly and half-starved their families. Silks and satins, scarlet and velvets, put out the kitchen fire, as Poor Richard says.

  These are not the necessaries of life; they can scarcely be called the conveniences; and yet, only because they look pretty, how many want to have them! By these and other extravagances, the genteel are reduced to poverty, and forced to borrow of those whom they formerly despised.”