More on Marketing Manipulation

Photo Credit: Asif Akbar at stock.xchng

Consumers are easily manipulated. No matter how savvy we think we are, we fall for many of the tricks advertisers and marketers use to sell products to us. We don't believe those "Going Out of Business Sale" signs that are permanent fixtures in some store windows, but we will succumb to just the right color, the right descriptive word, or perhaps the right scent. Here are several articles that may make you rethink just how sophisticated your choices are when you make purchasing decisions.

"Does This Smell Clean to You? - Products Bring Aromatherapy To Household Chores; Don't Say 'Banana'"

"Forget lemon and pine. People are fumigating their homes with exotic essences of ginger and hibiscus while scrubbing floors and bathtubs. That's because packaged-goods makers, in their endless hunt for the new and improved, are ramping up the complexity of product fragrances. Adding an elaborate bouquet that consumers crave to a product line helps build loyalty, marketers say. . . .Mr. Clean has New Zealand Springs, promising 'ferns, forests and glacier-carved waterfalls.' No matter that consumers may not know what a glacier-carved waterfall actually smells like. 'They're fanciful. You want to evoke a feeling or emotion, like when you're out in a meadow,' says Deborah Betz, a senior fragrance development manager at International Flavors & Fragrances, an industry supplier. 'It doesn't have to smell like an actual meadow.'"

Read more here to learn how the colors you see on the fashion runways and foods that are currently popular also affect the scents in cleaning products. It's a safe bet that these same factors influence personal hygiene products and cosmetics, too -- even organic ones.

"7 Reasons Why Diamonds Are a Waste of Your Money"

"Ira Weissman is a diamond industry veteran with a decade of experience at one of the world's largest diamond polishers. He has traveled the world buying and selling diamonds and now dedicates his time to helping consumers make the most of their diamond buying decisions."

The focus of the article is on the diamond engagement ring: Long-standing tradition? No. Great investment. No. Good way to stall when avoiding a marriage commitment? Possibly. Read the list to see if you want to rethink how you feel about diamonds in general.

"Cheap Clothing Costs a Lot More Than You Think"

I've posted in the past about the complex dilemma of cheap products produced under horrific conditions in foreign countries and sometimes in the U.S. (here's one previous post).  Elizabeth Cline is the author of a new book entitled “Overdressed: The Shockingly High Cost of Cheap Fashion” (I have not read it yet) in which she explains that the high volume/cheap labor/cheap materials business model has resulted, as most of us already know, in human suffering and negative environmental impact. "Cline states that 'There are very few middle-market brands and retailers and everything has become very cheap or irrationally expensive on the other end.' Leaving little room for quality products that don’t cost a fortune, most of us fall victim to clothing items we know aren’t the best sourced, yet we buy them anyway."

The article promotes www.fashioningchange.com, a website offering free shopping links and information about "stylish, eco-friendly and ethical alternatives to top name brands." My personalized recommendations look good enough for me to investigate further and probably purchase a few items. Read more here.

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And one final note: The Thoughtful Consumer blog celebrated its 6th anniversary on August 3rd. Thanks to all of you who read and comment!

Five Simple Tips to Help You Make Good Shopping Decisions

'Tis the season! But you may have noticed that it often feels like it's no longer the holiday season, it's the shopping season. In a year of record high unemployment, with massive numbers of home foreclosures, and utter financial disaster affecting a huge number of people, we're still being urged to shop until we drop. Of course, not everyone is buying it.

In the past, I've posted several alternative views about how to handle shopping during the holidays, including observing Buy Nothing Day rather than Black Friday; considering the words of Reverend Billy of The Church of Stop Shopping; and celebrating Discardia, the holiday created by Dinah Sanders who wants us to find the joy in letting go of stuff rather than acquiring more. But the reality is that most of us will be searching for a gift or two, so we might as well be as prepared as we can be when we face shopping.

I'm an advocate of buying consumable gifts rather than stuff: food, tickets to events, memberships to museums, etc. These gifts also offer the advantage of shopping online. But if you're going to buy something that your recipient will have around the house for awhile, I'm also an advocate of shopping at local small businesses who will appreciate your support. Whether you intend to shop in your neighborhood or hit the mall or superstore, it's helpful at least to be aware of some of the factors that influence our decisions to buy.

Retail stores will do their best to engage all five of your senses to get you to make a purchase. They'll be sure to use flattering lighting; they'll play music in a familiar style that makes you comfortable, like you belong there, and the tempo will be slow enough that you'll be encouraged to linger; they'll make the store smell inviting, too, and maybe offer you free samples of cookies or other holiday goodies (eating stimulates the salivary glands and studies have shown that leads to spending); and if you touch something you're considering buying, you'll be more inclined to buy it (a "disadvantage," from the retailers point of view, that online shopping can't overcome; but an advantage for careful shoppers!).

Stores will also encourage impulse buying. We've all been tempted, and often succumbed to the urge to pick up a little something extra while standing in line at the cash register.

Retailers often identify potential 'impulse buys' and stock them at the ends of aisles and close to the checkout stand. Shoppers may not plan to make these sorts of purchases, but stores do plan to make these sorts of sales.

Adding a bonus item for "free" is a temptation few can resist.

The power of 'free' is really quite incredible," says Dan Ariely, professor of psychology and behavioral economics at Duke University in Durham, N.C., and author of Predictably Irrational. In a series of experiments described in his book, Ariely found that people consistently preferred to get something free over paying a little for something, even though they'd actually come out ahead in the latter case. For instance, he offered mall-goers in Boston the following choice: a $10 Amazon gift certificate free or a $20 certificate for $7. Most opted for the freebie, even though they would have netted more money from the $20 certificate ($13 versus $10). In a second experiment, he offered a slightly different choice: People could buy a $10 gift certificate for $1 or a $20 certificate for $8. Again, the $20 certificate was $3 more profitable, but this time — with "free" off the table — people went for it.

All prices are relative and our perception of value is affected by this. A less expensive item in a store full of luxury goods may look like a bargain, but the same price on the identical item in a department store could look excessive because we'll compare it to the average department store prices.

So, for example, a computer store can probably sell more $100 printers if it also has a $300 printer for sale than it could if the $100 printer were the most expensive one they carried.

This is the time of year that stores are most aggresive in offering discounts if you open a credit card account with them. But simply choosing to pay with any credit card can be deceiving.

Paying with a credit or debit card can almost seem like not paying at all. No actual money changes hands. There's no real evidence that you're any poorer than you were before. But when you pay with cash, money does change hands, and not in a pleasant direction. You end up with less than you had before. You're demonstrably poorer. It hurts. A number of studies have shown that shoppers are less prone to impulse buying if they leave the plastic at home and force themselves to endure the pain of paying with cash. Ideally, they should use bills of large denominations, according to a 2006 paper in the Journal of Consumer Research. "People are less likely to spend if they are carrying a $50 bill compared to when they have ten $5 bills," says Mishra, a co-author of that article.

Finally, there is evidence that the shopping experience is different for men and women. We really do still behave like hunters and gatherers:

"There's a shopping center in Germany with a play area for men," says Daniel Kruger, a professor in the School of Public Health at the University of Michigan in Ann Arbor. "A woman can drop off her partner there, and while she shops he can drink, work with power tools or watch sports on TV."

The point being, both of them are happier that way. "Men just want to get what they want and get out," says Kruger, the lead author of a 2009 study published in the Journal of Social, Evolutionary, and Cultural Psychology that documented fundamental differences in the shopping behaviors of men and women. "Women have a much greater appreciation of detail, a much greater desire to actually experience what they're getting. They want to see several items and compare them."

The researchers linked these differences all the way back to when the man of the cave went out hunting while his mate stayed home gathering nuts and berries — "which is very similar," Kruger observes, "to going to a flea market today and sorting through everything to see what's good."

So, assuming you've thought through exactly how much shopping you want to do, how can you plan ahead to be sure you make your best possible shopping decisions?

1. Set a budget.
2. Don't shop while you're hungry or tired.
3. Don't buy something just because you can get something extra with it for "free."
4. Pay with cash.
5. Remember that hunters and gatherers are happier shopping separately!

© 2010 Cynthia Friedlob

Image credit: Robert Proksa at stock.xchng

Simple Living: Predicted Twenty Years Ago. Again.

I have just a few items in print that I can't seem to let go: the 20th anniversary issue of Rolling Stone, Abbie Hoffman's obituary, and a story (and cover) from the 1991 issue of Time magazine entitled, "The Simple Life." Setting aside discussion of the first two for some other day -- more likely, never -- let's examine the third. I'm simultaneously disheartened and heartened to read it again, almost twenty years after its publication. And, at the time it was printed, I recall feeling simultaneously disheartened and heartened to read it some twenty years after those of us who came of age in the late '60s and early '70s had professed the identical ideals: "a simpler life with deeper meaning."

Here are quotes from the article, which was written by Janice Castro, with reporting by Ann Blackman/Washington, Melissa Ludtke/Boston, and William McWhirter/Chicago, with other bureaus:

These are the humble makings of a revolution in progress: Macaroni and cheese. Timex watches. . . . Bicycles. . .

See the pattern? It's as genuine as Grandma's quilt. After a 10-year bender of gaudy dreams and godless consumerism, Americans are starting to trade down. They want to reduce their attachments to status symbols, fast-track careers and great expectations of Having It All.

In place of materialism . . . having time for family and friends, rest and recreation, good deeds and spirituality.

In a Time/CNN poll of 500 adults, 69% of the people surveyed said they would like to "slow down and live a more relaxed life" . . .

In scaling down their tastes, most Americans are making a virtue out of necessity. Contrary to perceptions, the past decade was an era of downward mobility for the majority of U.S. families, who kept up their spending by borrowing and relying on two incomes. Only the wealthiest 20% of Americans significantly increased their real income during the Reagan era, and the poor slipped further behind. . .

Not everyone believes America has changed its stripes, however. "If the present generation has learned anything, it is that talk is cheap. But are they really doing anything different?" asks Stanford economist Victor Fuchs. "The baby boomers are just growing up and playing out a predictable life-cycle change." . . . John Kenneth Galbraith, the eminent liberal economist, dismisses the trend as a bicoastal fad among fast-trackers. . .

The beginnings of the new mind-set probably go back as far as the stock-market crash of 1987, which had little immediate effect on the overall economy but gave many people an uneasy feeling about the Roaring Eighties." . . . Many people were awakened by individual experience: the plight of a homeless neighbor, the collapse of a bank, a friend's job loss. . .

The article continues with talk of "cocooning" (remember that buzzword?), the importance of spending more time with family, and:

. . . another reason for rejecting rampant materialism: its impact on the environment. . . Recycling has taken hold as a voguish and satisfying pursuit . . . Gilded '80s [TV] shows such as Dynasty and Falcon Crest are gone, swept away by . . . Roseanne, The Simpsons and Married...with Children . . .

In their search for more enduring gratification in life, many people are seeking spirituality, if not a born-again commitment to organized religion . . .

And the article concludes with:

Is the simple life just a passing fancy, a stylish flashback of the 1960s? Not so, say people who have studied both eras. Contends Berkeley sociologist Robert Bellah: "It's no longer messianic, the way it was in the '60s, but relatively pragmatic. That may give the present mood a greater staying power." That's good, because the American generation now reaching middle age has a lot of promises to keep -- not to mention mortgages to carry, tuition to pay and lawns to mow. No wonder they want to keep it simple.

Sound familiar? Yes, indeed. But it's different this time around.

In the '60s, the counter-culture revolution was bolstered by children of some privilege. It's easier to rebel if you know you can always go home and do laundry. I know; I was there. I was in school, then worked for a non-profit.

And after the '70s, what happened? The "Roaring Eighties," as the Times article called it. The era of "real gold," "L'Oreal...because I'm worth it," and, most famously, "Greed is good." The stock market was the place to be and if you weren't in it, you were missing out on a "sure thing." At least until 1987.

Then, in the '90s, the urge to simplify and cocoon was championed by people who were exhausted by their demanding jobs that had allowed them to spend enormous amounts of money on luxuries. And it's easier to simplify if you've got money in the bank. I know; I was there. I was in show biz, then became an artist.

What happened in the '00s? Financial lunacy. This time it was real estate. If you didn't own property, you were missing out on a "sure thing." And this time, even the big boys, the banks and brokerages, were so caught up in the madness that when the market collapsed, it brought them down right along with the individual investors. I know; I was there, but on the sidelines. I was fortunate not to have overextended in real estate and not to have trusted the stock market with everything else. I'm enormously thankful for that because you never know when life will throw a curve ball in some other way.

So where are we all now, with yet another decade behind us? There's still some talk about the benefits of simple living and lots of talk about protecting the environment, but today, for so many, simplification isn't by choice; it's being imposed on a lot of people who have been caught by surprise. When simplicity is a result of a lack of other options, it's doesn't feel so virtuous. It just feels like you're poor.

Bad financial decisions are at the root of the problem for many people, but for some -- many who were in the vanguard in the '60s and '70s -- age discrimination is now part of enforced simple living, too. Limited jobs mean limited opportunities. Scaled back expectations are the new reality for almost everyone, but especially for those who are too young to retire and too old to be considered employable, even if they have impeccable credentials. We live in a society that too often devalues experience and has never particularly valued maturity. There's an example of a curve ball thrown by life and it's clear that not everyone was prepared for it.

The obviously disheartening aspect of reading that Time article is reflecting on the fact that today's mess is just another example of the rather painful economic cycle that our society seems to repeat so predictably. What's heartening about it? It reminds us that we do manage to get through the hard times eventually. Society survived the Great Depression; why not the Great Recession?

So, with the blessing/curse of optimism, let's consider what's the best bet for getting through today's challenging time. Other than the obvious financial reality check that's required for most people, there's an attitude change that would be helpful and at least part of it relates directly to being a thoughtful, uncluttered consumer.

First, believe that less really is more, just as Ludwig Mies van der Rohe said over fifty years ago. I'm not advocating embracing the concept of "less" because it's frugal, or sensible, or necessary; instead I'm advocating embracing it because it offers us not only beauty, but also flexibility. Beauty gives us joy in the moment and flexibility is a highly valuable commodity during a period of change.

What if you made buying choices that would simplify your life by resulting in fewer possessions, but more appealing possessions? What if you chose to keep only those things you already own that are beautiful or useful, just as William Morris advised over a hundred years ago? (Beautiful doesn't necessarily mean expensive; it means pleasing to the eye, your eye.) What if you kept only the sentimental items that had true sentiment, not just history attached?

What if you emptied your home of all of your unnecessary stuff, not because you were panic stricken and felt obligated to have a garage sale, but because you wanted to make space to actually live in your home? Or because you wanted the flexibility to move if you needed to or chose to do so?

Then, what if you embraced the concept of change? What if you were bold rather than timid during these difficult times? What if you had faith in yourself and your ability to do whatever is necessary to stay afloat? What if you took this opportunity to remake your life the way you'd like it to be? I doubt that you'd be lugging around all of the stuff you currently own because you'd see much of it as a burden. I doubt that you'd be clinging to everything you've ever owned because you'd see that now is what matters and planning for the future makes more sense than seeking (false) security in the possessions of the past.

What if you embraced the goal of "a simpler life with deeper meaning?" I doubt that you'd be who you are at this moment, but I bet you'd become who you are in this life.

What if you did that?

© 2010 Cynthia Friedlob

Housing and the American Dream: Think Small

Whether the economy is (a) improving, (b) getting ready to tank again, or (c) precariously maintaining its equilibrium (take your choice, depending on which pundit you believe), we all need somewhere to live. There's a tremendous problem with homelessness here in Los Angeles and in other metropolitan areas, a topic undoubtedly worthy of discussion. But for this post, let's stick with the population that's fortunate enough to be able to own or rent comfortable housing.

For years, a significant part of the American Dream was to own a home, complete with yard and white picket fence. During the real estate boom, it seemed that everywhere you turned you were faced with people strongly advising you to buy a home, then urging you to leverage it into a larger home -- or you were at least supposed to refinance regularly to support buying all the stuff you needed to fill the place. You were met with looks of disbelief or even utter disdain if you weren't in the process of buying/remodeling/selling/trading up.

All that's changed. In fact, once again we're hearing that, in many cases, it might be smarter to rent. One example may apply to people who live in New York City. A recent New York Times article demonstrated that for a hypothetical family of four earning $175,000 a year, it would cost 18% more to own a house in the suburbs than to rent in the city. Of course, there are trade-offs that might make it worthwhile for some families to live in the suburbs, but that should not be an automatic assumption any more than one can automatically assume that buying a house is always a good investment.

If saving money is your primary concern, it's important to figure out if renting makes more sense no matter where you live. Here's a rent-or-buy calculator from the New York Times to help with that task. And here's a Devil's Advocate article entitled "Rent Forever, Don't Buy" that presents some of the benefits of avoiding home ownership. It's worth considering what's right for you in your situation without feeling pressured one way or the other.

What if you'd be quite happy to rent, but you can't afford a place in the neighborhood you prefer? In Los Angeles, one solution is to think small. An LA Times article talks about the Manhattan-sized mini-apartments built in Santa Monica that make beach living relatively affordable (in LA that means a 350 square foot apartment for $1100 to $1400 per month). Would you trade living space for beach access? Many people would.

But what if you want to own your home and are you're also willing to think small? I mean ultra-small. You might find that owning a home could cost less than the price of a fancy new car. I've talked about small houses in previous posts (see below) but there seems to be increasing media coverage of this option. "Downsizing to 100 Square Feet of Bliss," is an article from CNN.com about the joys of a small house in a bad economy. "Do It Yourself Downsize: How to Build a Tiny House" was a featured story on NPR just a few weeks ago. A do-it-yourself small house can cost less than $10,000 (of course, you'd also need land to build on, unless you're going to treat it like a trailer and be on the move all the time); plans are available for those of us who are less inclined to tackle the project on our own. Check out Tiny House Blog , This Tiny House, and Tiny House Design for excellent information and regular posts about very small houses.

Not everyone could live comfortably in a home as small as an average bedroom, but I think we're all probably more adaptable than we realize and I know that most of us could live with less space and fewer possessions than we have now. (Full disclosure: two of us downsized to a 1500 square foot townhouse purchased twelve years ago, before the boom and bust. It's quite comfortable. Because we both work at home, smaller might be a challenge, but certainly not an impossible one.) It's always easier to downsize by choice, but even if financial circumstances have you considering the possibility of moving to a smaller apartment or home, you may find that less space has certain advantages you never expected. Enforced uncluttering could be one benefit, if you don't rent lots of storage space to avoid the uncluttering process! (Read my book to learn about my adventures with too much stuff.) Rethinking how much you need could be pretty enlightening, too.

So, was Mies van der Rohe right when he said, "Less is more?" I think he was. I'd like to hear your thoughts in the comments.

© 2010 Cynthia Friedlob
Image credit: Gerard79 at Stock.Xchng

Related posts:
Small House, Big Benefits
Small Houses, No Houses
Living Small, Paying Rent
Manhattan's Smallest Home

FBI Scams and Social Network Schemes

The FBI offers continually updated alerts online about consumer scams and I encourage you to read the entire current list for details. You can even sign up for e-mails if you'd like to be notified immediately about the latest trickery afoot. Undoubtedly, the Nigerian prince who desperately needs your assistance to claim his inheritance is still prowling around, but there are always other nefarious characters brewing up new schemes. Below is some general information about just a few favorite scams that target all of us.

Bogus Charities: It's hard to believe that a tragedy like the earthquake in Haiti would bring out scammers, but it did, just as other tragedies have in the past. Fraudulent charities with familiar-sounding names solicit help via e-mail, a much more efficient system than in the old days when they had to rely on phone calls or snail mail. You'd think that anyone receiving a solicitation would check to make sure the charity was legit, but apparently that's not the case. This is still a profitable scam that harvests credit card information and sometimes cash and check payments. Solution: Verify the legitimacy of any charity before you make a donation. Charity Navigator can help you do this; the site also provides rankings of charities that show you how efficiently donations are being used.

Scareware: Have you ever seen an abrupt and usually noisy pop-up while you're online, warning that your computer is "infected with a virus?" That's scareware and it's a scam to get you to buy fake software. Download the advertised "virus protection" program and you could end up installing viruses, Trojans or keyloggers instead. (Keyloggers are particularly insidious; they allow the scammer access to your passwords.) The FBI estimates a loss of over $150 million to victims of this kind of scam. Solution: Make sure you have real virus protection software installed on your computer. If you do encounter one of these pop-up notices, just close your browser and run a virus scan in case there are any problems resulting from the pop-up.

Economic Stimulus Checks: Some clever scammers have sent e-mails purportedly from the IRS, stating that the recipient is eligible for an economic stimulus check from the government. Considering the sorry state of the economy and the lure of getting a piece of the well-pulicized but apparently little-understood stimulus package, this could easily hook an unsuspecting consumer. Of course, the recipient has to provide all kinds of personal information, including bank account numbers, before the "stimulus check" can be issued. Solution: Never give any personal information in response to an unsolicited e-mail; the government and financial institutions never send requests for such sensitive information via e-mail.

Numerous other scams are circulating online right now, including fake work as a "mystery shopper" (there are some legitimate mystery shopping sites, but you must find out which ones they are); fake greeting card links that install a virus if you click on them (cards sent from legitimate sites always identify the name of the friend who sent the card); work at home scams that involve "processing payments," "transferring funds" or "re-shipping items;" numerous scams trying to get personal financial information by using the names of government officials in the e-mails in order to look official; even a scam in which the e-mail recipient is told s/he has been selected to appear on Oprah Winfrey's "Millionaire Show" and all s/he has to do is buy a plane ticket, a show ticket and provide some personal information. Solution: Verify, verify, verify and remember the old adage that if something seems too good to be true, it probably is.

Social networking can be great fun but it also has created a friendly new system for scammers to exploit. Here's a quote from the FBI's update page (italics are mine):

Fraudsters continue to hijack accounts on social networking sites and spread malicious software by using various techniques. One technique involves the use of spam to promote phishing sites [phishing: trying to get sensitive information illegally], claiming there has been a violation of the terms of agreement or some other type of issue which needs to be resolved. Other spam entices users to download an application or view a video. Some spam appears to be sent from users' "friends," giving the perception of being legitimate. Once the user responds to the phishing site, downloads the application, or clicks on the video link, their computer, telephone or other digital device becomes infected.

Another technique used by fraudsters involves applications advertised on social networking sites, which appear legitimate; however, some of these applications install malicious code or rogue anti-virus software. Other malicious software gives the fraudsters access to your profile and personal information. These programs will automatically send messages to your "friends" list, instructing them to download the new application, too [further contaminating the pool of the social network's users].

I enjoy using Facebook to keep up with friends, many long-lost, and to share links to stories or websites I find interesting. But I've avoided all of the Facebook applications, even the "legitimate" ones, because they allow the application to access to my friends' information. I'm a fairly public user of the site because I also use it to promote my blog and website which, in turn, promote my book and art that are for sale. However, I still don't want my information provided to any applications and I certainly don't want my friends' information provided to them, even if the applications seem to be sending only harmless little "gifts." One Facebook user I'm aware of has had his identity hijacked and his entire list of friends was spammed yesterday with several bogus messages -- an annoying and potentially embarrassing situation. Solution: Think twice before automatically clicking on an advertising link on your social network page or on a video supposedly sent by a friend. And remember that there's no such thing as a free iMac!

[An aside: Of course, Facebook and other social networking sites aren't the only possible sources of annoying and embarrassing spam attacks on one's friends. I've had my e-mail names cloned on both services that I use and a couple that I don't. Apparently "I" haven't spammed my list (I'm certain someone would have informed me), but I do occasionally receive spam at my own addresses from "myself!"]

There's certainly nothing new about people using trickery to steal from other people, but the Internet opens up opportunities of unprecedented scale. A dedicated online scammer can target many thousands of marks in the time it used to take a snail-mail fraudster to address an envelope. Solution: Be very thoughtful before you click.

© 2010 Cynthia Friedlob
Photo credit: sqback on stock.xchng

Counterfeits and Consumers

Consumers already have enough trouble trying to make responsible choices without adding the burden of worrying about avoiding counterfeit goods. Unfortunately, thanks to fact that people are flawed creatures, counterfeit products often invade the marketplace because their manufacturers hope to make a quick buck. While this is certainly unfair to legitimate manufacturers and trusting consumers of such commonly counterfeited things as handbags or watches, it can be deadly if the counterfeit product is a condom.

Of course, it's highly unlikely that anyone would choose to purchase fake condoms (we know that some less-discriminating people do make that choice for handbags and watches), but what happens if the packaging is good enough to fool an unsuspecting consumer into buying the fakes? That consumer runs the risk of contracting or spreading sexually-transmitted diseases, including HIV.

When I saw the article, "China's Latest Scandal is Counterfeit Condoms," on today's LA Times website, I thought I'd investigate further. What I discovered is that the condom scandal is nothing new. The press has been talking about it for years. Here's a timeline of reporting about the issue, using just a sample of articles from various sources:

2005 March 17 - The BBC News reported that thousands of fake condoms had hit the market in the UK.

2006 December 4 - The Guardian published an article about counterfeit drugs that included this reference to counterfeit condoms:

A few years ago, Durex executives were astonished to discover pirated condoms bearing their brand name on the production line of a prospective Chinese partner's factory. "It sparked a discussion among the visitors about whether they had found the perfect supplier," said Calum MacLeod, a consultant to Durex at the time. "But from a corporate ethics point of view, it was not realistic."

2007 December 19 - ConsumerAffairs.com cited condoms as one of many products on a list of high risk drug and medical items. The article also stated:

[Secretary of Health and Human Services Michael] Leavitt signed two agreements with the Chinese government last week that puts the onus on the Chinese and their manufacturers rather than the beleaguered inspectors of the dozen U.S. agencies responsible for imported goods. . . Despite the strong language of the accords and the report, Leavitt did not hail it as a victory or even a long-term cure. . . The Chinese grudgingly agreed to these accords in the face of a more than year-long public relations disaster and it may be difficult getting them to follow through because most reports out of the country reveal that agency leaders don't actually believe there is a serious problem.

2008 June 3 - Tu Salud, The Latino Wellness Magazine, reported about the discovery of sales of millions of fake Chinese condoms in discount stores in New York. (They referenced a May 5th Newsday story that's no longer available online.)

2009 November 11 - UPI.com posted a story about a factory in Hunan Province that had manufactured more than two million counterfeit condoms in the previous eight months:

Four people were arrested at the factory which was distributing illicit condoms nationwide that provided little or no protection and carried the risk of both pregnancy and disease. . . Authorities say when they entered the factory they saw bare-chested employees using vegetable oil to lubricate the condoms and putting them into fiber bags without any sterilization.

2010 January 21 - The LA Times article I mentioned earlier references incidents dating back to 2008 and concludes with a comment about how the Chinese government has handled counterfeiting (italics are mine):

"Given the vast size and complexities of the society, it is not surprising that there continue to be problems with product quality," said Zha Daojiong, a professor at Peking University's School of International Studies. "Back in the early 1990s, the Chinese government repeatedly launched 'strike hard' campaigns -- throwing those involved in producing and selling below-quality products to years in jail.". . But, he added, proper monitoring systems cost money, resulting in higher prices. . ."It's impossible to have enhanced surveillance on the cheap," Zha said. "A genuine dialogue [needs] to take place between the government and the populace at large [about] the costs the average consumer is prepared to pay."

The Chinese government has been trying to stop the manufacture of these counterfeit products since at least the early 1900s according to this article, but I have no doubt that it's been an issue much longer than that. I also think it's safe to assume that there are plenty of credible articles in the press about Chinese counterfeit items that pre-date the few I've listed from the last five years. We've been adequately informed. But the significant issue now is that increased trade with China has resulted in the importing of many more types of items in much greater quantities than ever before. And if the general perception in China is that counterfeiting is not a significant problem, then the risks associated with buying certain Chinese products are substantial.

How do we cope with these kinds of threats? Making sure that we're aware of them through the work of a vigilant press is the first crucial step. Obviously, there are certain governmental restrictions that can be imposed on imports. More extensive and thorough safety inspections of imports can help, too. We live in a global economy, so we can't always buy American-made goods; also, some goods labelled as made in this country use parts or materials imported from other countries. And there's always the possibility that counterfeit products can be made right here, too. It's enough to kick a person's paranoia up a notch or two.

But I also think that the Chinese professor's observation in the LA Times article touches on part of the problem: are consumers always going to choose the least expensive option or will we be willing to pay more in order to get better (in this case, safer) products?

Lots of us are watching our spending more closely now because of the economic crisis that has affected the majority of our population. That means shopping for "bargains." But cheap isn't always a bargain. As a society, we need to make an important shift in our thinking and realize that buying fewer things of higher quality from trusted manufacturers (or, in the case of some products, from local sources) is better than buying lots of things of shoddy, or perhaps even unsafe, quality.

Consumer decisions are often more complicated than they seem on the surface, but there's nothing to debate when it comes to avoiding dangerous counterfeit products. We can't control all of the factors that allow them to get to market, but to be safe, we can and must make reasonably informed decisions when we're shopping for food, drugs and other medical items.

So, let's kick that paranoia back down where it belongs and remember that thoughtful consumers just do the best we can to avoid fakes. Like the song says, "Ain't nothin' like the real thing."

© 2010 Cynthia Friedlob
Photo credit: seesky @ stock.XCHNG

Stop Screaming About Health Care Reform

Watching an older man scream that he wants the government to keep its hands off his Medicare insurance has probably been the most ludicrous image I've seen in the so-called debate about health care reform.

The most disturbingly ignorant image was the woman holding a poster depicting President Obama with a Hitler-style moustache as she challenged Representative Barney Frank with the astonishing claim that the President's suggested reform is a "Nazi policy."

The visions of men openly, although legally, carrying guns (including an assault rifle) at several of the President's Town Hall meetings across the country I've found almost incomprehensible.

The biggest problem our society faces is that these are not isolated incidents. Many people are enraged, but they're also woefully ignorant. Political discourse can barely exist in this uninformed, hostile atmosphere.

As blogger Seth Godin said, the screaming of nonsense and lies "is often a tool used to balance out the lazy ignorance of someone parroting opposition to an idea that they don't understand. . . If you want to challenge the conventional wisdom of health care reform, please do! It'll make the final outcome better. But if you choose to do that, it's essential that you know more about it than everyone else, not less. Certainly not zero. Be skeptical, but be informed. . . Screaming ignorance gets attention, but it distracts us from the work at hand."

And there is serious work at hand.

Anyone who denies that health care reform is necessary must be completely out of touch with reality. Steve Lopez of the LA Times reported on a recent free clinic staged in Los Angeles by Remote Area Medical (I mentioned RAM in my August 1st post on charitable giving). He described what he saw there as "scenes from the Third World": The Forum, a huge facility that formerly housed the LA Lakers, converted into a massive medical clinic. Exhausting waits in long lines full of desperate people, often entire families, who had no insurance, not enough insurance or who were unable to pay the deductible required for the treatment they needed. Overwhelmed doctors, dentists, opticians, nurses and other support staff. And not enough time to help everyone.

Unless we were to follow the lead of the UK, Canada or France and offer universal health care -- something that won't happen in this political climate -- whatever changes are made will require many of us to continue to buy some form of health insurance. To say that we will need to be thoughtful consumers is an understatement.

So, in order to participate in this crucial debate -- and let's remember that it is a debate, not a showdown at the OK Corral -- let's at least do enough research to get the basic facts straight. I suggest starting with this very short, informative article from BBC News in which you'll learn that our current health care system is less efficient than those in the UK, France and Singapore.

Then search on-line. Thanks to the Internet, it is possible to get accurate information about the reform that's being discussed (there are no "death panels," no euthanasia for older people, no one interfering with your health care to any greater degree than it's already being interfered with right now by your insurance company, if you're fortunate enough to have one). We can go to major, reliable sources that still have journalistic integrity (thank Heaven) and read. There are no short cuts. We need to get that information and, even if it's confusing or there's a tremendous amount of it or we'd just rather do something else with our time, we need to try to understand it so that we can act to make responsible reform happen.

How do we act? Obviously not by screaming, not by spreading false rumors or innuendo, certainly not by making ridiculous and outrageous claims. Instead, click on these links to find out (if you don't already know) who represents you in the House and who represents you in the Senate and e-mail your opinions to them. Members of Congress can't act in our interest unless they know what we think.

This is no time to bow out of the decision-making process; we all must participate to make sure that we get the health care reform that we need.

Our lives depend on it.


© 2009 Cynthia Friedlob
Photo Credit: Library of Congress via PingNews
Public Health Service Nurse and Patient (pub. date: between 1918 and 1925)

You can read more and get links to many other blogs that are publishing posts on this topic today, "Elders for Health Care Reform Day." Go to www.TimeGoesBy.net.

Being Thoughtful About Money

Let's just admit it up front: once a society goes beyond the barter system, "finances" are all smoke and mirrors. If I have a couple of chickens, you have a goat and we trade, you'll get some eggs and I'll get some milk. If I bake loaves of tasty bread, you weave a beautiful blanket and we trade, there’s no mystery about the exchange or value of goods.

Start using money and everybody's operating on faith. Even before we abandoned the gold standard, everyone had to accept that gold was special and worth some amount we all could agree on -- a fairly arbitrary assessment when you think about it. And now there are plenty of bizarre, almost totally inexplicable financial instruments that have brought down the entire world economy. This is progress?

Obviously, in a complex society the barter system won't work, therefore money is necessary and useful. Maybe it's the abstractness of the concept of money that gets so many people into trouble.

Clearly our perception of money and credit and what has value has been tossed on its head in the last couple of years. This is not a bad thing in the eyes of someone like me who came of age in the sixties, but it's certainly a bad thing for anyone who was caught unprepared for the current recession.

So, armed with only a very fine liberal arts education and far less money than Donald Trump, I'd like to offer a few thoughts about financial planning from a thoughtful consumer's point of view. Investing presumes that you are fortunate enough not to be living paycheck to paycheck and that you are fortunate enough to have a paycheck at all. Even if that's not the case, take heart. You can still use this information to help plan your future.

First, the stock market: it's not for everyone, especially if you buy individual stocks. If you have a pension plan of any kind at all, you're already in the stock market. It's okay if you choose to invest your own money elsewhere, no matter what the investing gurus insist. It's your money.

What set me off about stock market investing was yet another article reporting about yet another company that had missed analysts' profit predictions; in this case, the company had "only" made 26 cents instead of 31 cents per share. This caused the stock price to drop 7 percent.

If you were an investor in that company, you would not have this information quickly enough to act on it to avoid losing at least some of your investment. If you were a long-term investor, you might shrug it off and feel confident that you'd recoup your money in time. But how would you know this? Either by relying on your broker (an honest one, I hope, who charges less than the usually high standard fees), or by having the ability on your own to investigate the company in detail and make appropriate decisions based on your knowledge of the company itself, the entire industry and reasonable predictions of future trends. How many of us can do that? Not many.

If you bet on the stock market by responding to supposedly hot tips, you're gambling, not investing. If you still have "disposable income" in this recession and choose to gamble, again, it's your money so it's your choice. Just don't delude yourself into thinking that a hot tip is better than a Lotto ticket when it comes to retirement planning.

But if you're convinced that the market is the place for you to be, I'd like to suggest the following books (total disclosure: they are not infallible, nor do I personally endorse or follow all of the recommendations, but, like I said, I studied liberal arts).

If you know something about the stock market, or thought you did until lately, try these:

A Random Walk Down Wall Street by Burton Malkiel. This book presents a strong case for index fund investing and explains why it can be very expensive to try to beat the market.

Mr. Market Miscalculates: The Bubble Years and Beyond by James Grant of "Grant's Interest Rate Observer," also the author of the original Minding Mr. Market. Grant suggested that "Mr. Market" behaves in a manic-depressive way (bi-polar would be the updated term for today), so it should be no surprise that the opinions of someone who is so afflicted might not be terribly reliable.

If you haven't got a clue about investing or if you know just enough to be dangerous, try this:

The Only Investment Guide You'll Ever Need by Andrew Tobias, is an engaging, informative book that novice investors can get through without feeling overwhelmed. He offers information on many types of investments and uses his personal experiences as examples.

If you want to learn how reasonable people can be led into ridiculous investing schemes, I'd suggest:

Extraordinary Popular Delusions and the Madness of Crowds by Charles MacKay. You might not think that a book published in 1841 could be relevant today, but that's not the case. There's a priceless chapter about the Dutch tulip mania in the 1600s during which the value of tulip bulbs was greater than the value of gold (so much for the gold standard). Although the precise accuracy of MacKay's account has been questioned (what isn't?), the story will convince you that bubbles are nothing new.

However, if you want to consider an alternative investing plan, I'd suggest:

Your Money or Your Life by Vicki Robin, Joe Dominguez and, for the updated edition, Monique Tilford. I'm about to start reading the new version of the book, so my recommendation is based on having greatly appreciated the original which was written back in 1993. In fact, this title and Sugar Blues are the only books that I've purchased multiple times for myself but ended up giving away to friends. The authors ask you to think in terms of "life energy," i.e., calculate how much life energy you're required expend in order to earn a dollar. You'll find out that your hourly wage is less than you believe. You'll also find out a lot about how you relate to money.

If you want to rethink your relationship to money even further and you nurture "back to the land" fantasies as I do (and, in my case, they will remain fantasies, which is all for the best), consider this fine book:

The Good Life by Helen and Scott Nearing. I read this long ago, but one concept in particular will remain forever in my mind as an example of how to structure a thoughtful life: the Nearings advocated spending four hours a day earning a living, four hours serving the community, and four hours pursuing one's personal interests.

Further total disclosure: I don't follow all of the advice in the alternative books either, but much of it has been extremely valuable to me. Also, I haven't always made the best decisions, but, thanks in part to all of the authors mentioned, I've made some good ones.

The important point to remember is that if we're going to be thoughtful consumers, we need to understand the process we use to consume, then figure out a way to shape our lives financially so that we can find a greater meaning than what is provided by acquiring more and more stuff. This also requires asking ourselves:

What good is buying things that are supposed to be better for the planet if we really can't afford to buy anything at all? How can we be socially conscious if we're working two jobs and haven't an ounce of energy to devote to anything beyond our survival? What can we do to take control of our finances, as much as we possibly can, so that we can move on and live worthwhile and satisfying lives?

And that's my two cents. (Oh, come on. You knew it was coming.)

© 2009 Cynthia Friedlob

Photo credit: pxl666
StockVault.net

National Regifting Day

There are other holidays around this time of year and I'm not just talking about Hanukkah.

Yes, National Regifting Day is coming up on December 18th, the Thursday before Christmas. The folks at Regiftable.com have created this holiday "in honor of holiday office parties and the 'unique' gifts exchanged at them." According to their research, "4 in 10 regifters (41%) target coworkers as the recipients of their regifts."

The website offers free customizable gift tags you can print. They've even conducted surveys to discover how people feel about regifting. Here are a few of the survey results:

"The majority of people (62%) say they regift because they think the item is something the recipient would really like; this is up from 53% who answered similarly in 2005.

"More than 4 in 10 people (42%) say that they regift to save money; this is up 27% since 2005 when only 33% claimed to regift for monetary reasons.

"More than half (60%) of Americans think regifting is becoming more accepted."

Those were the results last year -- pre-financial meltdown. I expect that there will be more regifting going on this year in an effort to save money. And there's nothing wrong with that as long as you follow some important regifting rules. The Motley Fool has a useful article and list, greatly condensed here:

Don't confuse "barely used" with "brand-spankin' new.”

Do not pass off items that were clearly purchased for you.

Don't declare, "It's vintage!" when it's really just plain bedraggled.

Do keep a flow chart of gifting so you don’t regift the original giver.

Triple-check for all telltale regifting signs such as gift tags stuck in the bottom of the box.

Give with good intentions, as if the gift were new.

But the final rule is the most important one that we should remember:

Give it away anyway. Even if the item isn't in perfect condition, someone, somewhere will be delighted to have it. Pass it on to a family member who would enjoy it or hand it over to your favorite charity.

You might be feeling a bit strapped for cash this holiday season, but it's still likely that there's something (more likely, plenty of somethings) you already own that you can let go. With so many people struggling through lay-offs, cut-backs, foreclosures and other difficulties, now is the perfect time to "pay it forward."


© 2008 Cynthia Friedlob

Shop 'til You Drop . . . or Until the Economy Collapses

Who knew that George W. Bush was right? After 9/11, he instructed the citizenry to go out and shop. Shop because that's what real Americans do. Shop or the terrorists win.

Well, he was only partly right to tell us to shop; he missed the boat by not giving us the most important reason to keep on spending, even in the face of a national disaster of epic proportions:

Americans have to shop or our economy collapses and when that happens, the world's economy collapses, too.

Easy to get, sub-prime mortgages were a boon to shoppers looking for homes. The fact that our country became an importer reliant on schlocky, cheap, Third World-manufactured products was a gift to shoppers looking for bargain prices. The stock market was a fabulous windfall for shoppers looking for a secure retirement. So shop, fellow Americans, and keep the machinery of consumerism chugging along!

Until everything falls apart.

Turns out the entire financial system of our country (and much of the world) was being run like a shameless scam maybe one notch better than a Ponzi scheme. The guys on top were raking in plenty of money (they always do) and most of the rest of the population of the western world consisted of poor suckers who thought that happy days were here again forever. Not so.

Recently I've read several fine articles and posts about the precarious state of our economy and its effects on corporations and individuals. I'm particularly fond of one in the LA Times by Judith Freeman, who wrote a touching story from a different perspective. It's called "Americans or Economic Beasts of Burden?" in which she writes about having observed people over the years as they shopped in thrift stores. But she begins her article with her memory of a night that she says haunts her to this day:

"On the night of Aug. 21, 2001, my husband and I checked into a motel in Miles City, Mont. Once settled, we poured ourselves a glass of wine and turned on the TV in order to relax after a long day's drive. I've never forgotten that night. It's haunted me ever since. An economist on the evening news was discussing the economy, then in the midst of a serious slump. The economist looked into the camera and said, 'If the American consumer packs it in, the entire global economy is in jeopardy. The American consumer better hang tough or we're in real trouble.'

"I don't think I had ever before quite understood in such stark terms just what beasts of burden we'd become. What the economist said made me realize something I'd never considered -- that the entire global economy, as he put it, depended on Americans continuing to consume."

Notice that the economist made this observation prior to 9/11 so the foundation for Bush's exhortations to keep shopping was already in place.

Ms. Freeman concludes her article with speculation about a possible benefit from the current malaise that is keeping shoppers from doing their "civic duty" -- I agree with her:

"It seems to me there might be a good side to this. It's as if the consuming fever has broken, if only temporarily. We're disinclined to carry more debt or keep shopping, even if we could, even knowing that the entire global economy might depend on us getting and spending. We're all wondering where this economic meltdown is headed, and how long it might last . . . And will there be a time when we can hope to be relieved of our burden of hanging tough? Can there be some different kind of engine to drive the world economy other than the endless, often mindless consumption by ordinary Americans?"

Yes, there must be another way. I'm a great believer in hope for the future and feel optimistic that this economic downturn is part of the endless cycle that humanity seems intent on repeating: greed that gets out of control until the system collapses; then a period of reflection, restructuring and ethical, responsible behavior that builds until opportunities are so prevalent that greed kicks in again.

Okay, on the face of it that doesn't sound particularly hopeful, but I like to think of the process as a spiraling forward motion in which, over time, more and more people become responsible and ethical, while fewer and fewer people are tempted by greed.

So, even though we're in turmoil and certainly many people are suffering, on a larger scale, maybe we're headed toward that rebirth of a caring, less consumption-oriented society. Maybe we're realizing that we don't have to shop 'til we drop to keep the world afloat. And maybe that realization will help us ensure that the terrorists won't ever win.

© 2008 Cynthia Friedlob

Thoughtless Financial Meltdown

Unless you've been on another planet recently, you've witnessed some dramatic changes in our financial markets. And, unless you have super-human intelligence, you're probably trying to figure out what happened and why the government (read: taxpayers) suddenly has to come up with a bazillion dollars to fix everything.

Some parts of the current mess are complicated; what exactly is a subordinated, pre-accounted, sub-prime mortgage-backed, qualified risk-reversal, fiscal debenture? Well, it's something I just made up. Regrettably, that's pretty much how the financial instruments that contributed to this mess were created.

I'm far from an expert when it comes to understanding our monetary system, but it seems to me that the core of the mess we're in can be explained simply: greedy lenders sold high-risk mortgages to greedy or ignorant people who either (1) felt they were entitled to live "The American Dream" of owning a home and would figure out how to pay for it in "the future," or (2) were so poorly informed about what an adjustable rate mortgage is that they signed on for a loan that they didn't know they'd have to worry about in "the future." Bad news either way.

Then, a bunch of greedy Wall Street hot-shots decided to sell little slices of imaginary money (it would magically materialize sometime in "the future") based on those loans made to people who couldn't afford them. In other words, it was a giant Ponzi scheme. It worked until "the future" came around. Now.

I do have some sympathy for home buyers who were duped by aggressive and sometimes fraudulent lenders, then got hit suddenly with an interest rate that bumped up their house payments to an amount they couldn't afford. There are also people who have to deal with unexpected medical expense or extended unemployment and suffer financial difficulties as a result of situations that spiraled out of their control.

But there's another factor at work here for many highly paid corporate executives and many homeowners who just got caught off-guard because they didn't scramble out of their unfavorable loans in time: an irrational expectation that somehow they'd scoot through the day of reckoning unscathed.

Author Barbara Ehrenreich wrote an op/ed piece called "The Power of Negative Thinking" in the September 23rd NY Times:

"GREED — and its crafty sibling, speculation — are the designated culprits for the financial crisis. But another, much admired, habit of mind should get its share of the blame: the delusional optimism of mainstream, all-American, positive thinking. The idea is to firmly believe that you will get what you want, not only because it will make you feel better to do so, but because 'visualizing' something — ardently and with concentration — actually makes it happen. You will be able to pay that adjustable-rate mortgage or, at the other end of the transaction, turn thousands of bad mortgages into giga-profits if only you believe that you can."

I'm pretty darn tired of all the "just believe it and it will be so" proponents, too. I happen to have a positive attitude, but I don't tip over into delusional thinking. Ehrenreich believes that our society has become delusional, and I agree with her. But it wasn't always this way:

"Americans did not start out as deluded optimists. The original ethos, at least of white Protestant settlers and their descendants, was a grim Calvinism that offered wealth only through hard work and savings, and even then made no promises at all. You might work hard and still fail; you certainly wouldn’t get anywhere by adjusting your attitude or dreamily 'visualizing' success."

Eventually the day dawns when the piper must be paid. The problem is that those people who carefully and thoughtfully managed their debts get stuck with the bill, too. And, in this particular meltdown, there are financial industry executives whose past behavior might be deemed illegal who are looking at huge "golden parachutes" that, if added together, probably would total half the money that is supposed to be needed for the massive government bailout.

Is it any wonder that so many people are mad? Responsible budgeters feel ripped-off; uninformed homeowners who are losing their houses want to know what happened; even the people who felt entitled to maneuver their way around their responsibilities are angry that they didn't get away with anything. And is it any wonder that members of Congress are reluctant to rush to pass unpopular emergency bailout legislation that could lose them votes in few weeks?

Meanwhile, the financial sector crumbles around us with bank failures and consolidations, insurance company failures or near failures, brokerage collapses, and investor confidence in a ditch so deep that it's hard to see the sun. Credit is so tight that you might have to sign a formal agreement with your best friend to borrow twenty bucks. How can we figure this out?

I've compiled a very brief list of articles, in addition to Barbara Ehrenreich's, that I found informative and interesting:

NY Times: Behind Insurer's Crisis, Blind Eye to a Web of Risk

Washington Post: A Lesson the Markets Ignored

Wall Street Journal: The End of Wall Street

Financial Post (Canadian): You Can't Have It All

The Financial Post article is one of my favorites and I recommend it highly. Here's the sub-title:

"Don't blame politicians and bankers. The real cause of the credit crisis is a society that wants everything now."

Yes, there's plenty of room for a whole lot of people to take some personal responsibility in this unpleasant scenario, but why bother with that as long as there seemed to be an endless supply of money? Just follow the advice of the old Cajun song lyrics: "Laissez le bon temps roullez!"

Unfortunately, the good times rolled right into a brick wall.

© 2008 Cynthia Friedlob

Juxtapositions: Inflation and Profits

On page one of the business section of the LA Times today, a story noted that the 5.6% July inflation rate is the highest since 1991. This bad news was accompanied by a documented drop in real wages and a rise in unemployment claims.

Another story in the same business section, page two, reported that Wal-Mart profits were up 17% in the second quarter, a greater increase than was expected. This is due to "tight inventory controls and a renewed focus on low prices that is attracting financially squeezed shoppers."

(Those low prices are primarily the result of cheap labor and production costs in other countries, but that's another story.)

So, if you're a financially squeezed shopper, you can go to sleep tonight knowing that the discomfort that forces you to shop at Wal-Mart is making money for the stockholders who probably shop elsewhere.

However, if you're fortunate enough to be a saver, you can rest better knowing that, thanks to the inverse relationship between interest rates and inflation, interest rates will probably go up and you'll earn more on your savings.

Unfortunately, as a result of those same high interest rates, you probably won't be able to afford to buy a home. But prices are low on housing right now, thanks to the loud pop of the housing bubble, so maybe you can pull it off.

Unless you lose your job, of course, which is likely because businesses are under pressure to make more profits for their investors, so they'll be cutting costs wherever they can and one of those costs could be you.

And even if you keep your job, the money you're making isn't worth what it used to be because of inflation.

Simple, huh?

© 2008 Cynthia Friedlob

Embracing Charity in Tough Economic Times

It's no surprise that charities and other non-profit organizations suffer during economic downturns. Public and private funding is cut back and individuals are reluctant to donate as much as they have in the past because they can't afford it or they feel insecure about their own futures.

The current malaise that affects our society has had exactly those effects. The Chronicle of Philanthropy, a newspaper serving the non-profit world, has a summary in their "Bracing for Tough Times" article from last February by Holly Hall and Sam Kean.

You can find evidence in reports from across the country, too. The Dayton Daily News in Dayton, Ohio, has an ongoing series about "coping with an uncertain economy" and the effect it's having on charities. Florida Catholic has a story from Pensacola. Nashville's NBC affiliate television station, WSMV, has a website report on the "money crunch" faced by charities.

And it's not only the recipients of the benefits of charities and non-profits who feel the pinch; it's the entire community. The State News, the student publication from Michigan State University, reports on the impact to that state's economy: "The Michigan nonprofit sector is the fifth largest industry in the state in terms of employment as it provides about 380,000 jobs. According to the MNA, Michigan nonprofits generate nearly $69 billion in total economic activity annually and have assets of more than $80 billion."

Charities have to make up for their lost revenue somewhere, so not only are services reduced, but jobs are eliminated or hours are cut. Building improvements are put on the back burner. Just staying afloat becomes the primary goal.

There's one specific issue that came up just today when I spoke to a friend who's retiring and closing her business: the price of gasoline. She's been working very hard to sell or otherwise dispose of equipment and furniture. She discovered that Salvation Army has had to cut back the number of trucks they use to pick up donations because gas prices make the expense of operating them too high. She also discovered that movers are adding as much as a fifteen percent surcharge for fuel to their bills.

Commuters have certainly suffered from the high price of gas, especially in places like Los Angeles where people often drive ridiculous distances to get to work. But gas prices have also forced some charitable organizations to completely rethink how they serve their constituencies. In a recent NPR Marketplace piece, Sarah Gardner reported:

“Volunteers for Meals on Wheels drive their own cars to deliver over a million meals a day to home-bound seniors. These days, the meals and the wheels are more expensive. A recent survey showed at least 58 percent of the charity's local programs have lost volunteers due to high gas prices. . . many of those were seniors on fixed incomes themselves.”

Enid Borden, President of Meals on Wheels Association of America observed that "volunteer shortages have meant also cutting some delivery routes. She blamed two senior deaths on those cuts.”

If people dying as a direct result of gas prices doesn't get you out of your monster SUV, what will? -- But, if you were driving a gas-guzzling SUV, you probably wouldn't be reading this blog anyway.

So how do we turn all this bleak information into something positive? How do we most effectively deal with this crisis?

There's a popular saying that the two Chinese characters that make up the word "crisis" are "danger" and "opportunity." Alas, that's a myth that's been debunked, but I still believe that the basic idea is sound. We're certainly in dangerous times in terms of being able to meet the needs of so many of our citizens, and for some of us, our own needs. Obviously, cutting expenses and being especially thoughtful about our purchases are sensible responses, but there can be danger there, too, if these decisions are based not only in practicality but in fear. Decisions made in fear can be confining, stifling, and can hold us back from fulfilling our potential. The way out of a crisis is not to hold back in fear, but to move forward wisely.

So let's look at the great personal opportunity we have and make another decision based in love and charity. If you are fortunate enough to have more than you need, this is definitely the time to let it go. If you have clutter, there's no better time than now to donate your extra stuff to those who are in need. There's no better time to clear out your home so that you can clear your mind to deal with whatever situation comes your way during this period of uncertainty.

Think about that phrase, "staying afloat" -- to move or rest lightly on the top of the water. It's a lovely image, floating down a stream while the water underneath and around you ripples and gurgles over rocks and hidden tree trunks; it's the opposite of sinking like a stone because of clinging to excess baggage, literally and figuratively.

If we want to float lightly through life and think clearly about how to create a brighter future for everyone, we need to have less stuff. There's no better time than now to embrace the concept of charity.

© 2008 Cynthia Friedlob

Faith Popcorn Says It's Cooler Not to Spend

If anything indicates that we've probably reached a cultural "tipping point," as Malcolm Gladwell would put it, it's when a topic hits Oprah's TV show at the same time that "trend oracle" Faith Popcorn makes a pronouncement about it. In this case, Oprah did a show featuring a segment by Lisa Ling about the Freegans and Faith Popcorn was just quoted in a USA Today article saying that it's cooler not to spend money.

The USA Today article also quotes futurist and business trend adviser Watts Wacker: "The new status isn't how much you've got, but your ability to show what you don't spend. This is a seminal moment. It's not a fad that will die out when the economy picks up." [italics mine]

Could this possibly be true? Have that many people finally realized that buying more and more stuff isn't the path to personal fulfillment?

Maybe. Or maybe people are just being pushed in that direction by economic considerations. USA Today continues:

"There's a sense that prices are rising — and will continue to rise — but wages will not," says Ken Goldstein, economist at The Conference Board. "This is squeezing household budgets whether they're $200 per week or $200,000 per year. Folks are looking closely at anything they don't have to purchase now."

Whatever the motivation, I'm pleased to hear that it's now "officially" cool to be living with less.

I don't have any plans to go dumpster diving with the Freegans, but I have absolutely no problem being cool.

© 2008 Cynthia Friedlob

Frantic Shopping vs. Retiring Early

There are several blogs and websites that have devoted space to gifts that aren't "stuff" (The Unclutterer's comprehensive list of suggestions is a good place to start looking). There's also plenty of information available about keeping perspective and simplifying your life during the often stressful holiday season (you might want to take a look at my posts tagged "Holidays").

And what are the positive results of these efforts? Well, having a calm and joyful holiday season is a big benefit, as is not contributing more useless stuff to someone else's life by calling it a "gift."

But what if we thought bigger? What if we thought of realigning our patterns of consumption not just for the holidays, but for a goal that probably seems unattainable to most readers?

Early retirement.

Frugal living is obviously required to achieve this goal, unless you're one of the lucky few whose income is so substantial that cost-cutting means ditching the private jet and suffering through flying first class on a commercial airline. Ironically, frugality used to be considered a virtue, not a curse. However, now when someone talks about frugality, it usually presumes suffering because we lack what we need.

Not so.

If we redefine what we need, there's quite a bit of flexibility in how much we can accomplish with just a small amount of frugal effort. But the most interesting example of the benefits of frugality that I've come across lately is in an article provided to Yahoo Finance by Bankrate.com about extreme early retirement -- in your thirties!

Before you dismiss the notion because you think it could not possibly apply to you, and even if you're well beyond your thirties, consider this quote from the article:

"Aside from an unwavering focus on their goal and an indifferent attitude toward amassing all the latest stuff, extreme early retirees can't be lumped into the same category. They run the gamut from young parents, singles and dual-income couples without children. Weston [MSN personal finance columnist and author Liz Pulliam Weston] has talked to couples with as many as four children who are living in expensive areas of the country, as well as those who have no family ties and a cabin in the woods.

"They share an excitement about their lives, a desire to spend time in pursuits that are meaningful to them, and often, an environmental conscience."

So, let's take a moment to play the "what if" game. What if you decided to buy fewer gifts this year? What if you decided to spend nothing and, instead, make your gifts from things you already have around the house? What if after the holidays you didn't have a gigantic credit card bill? What if you didn't have a credit card bill at all?

Now let's go a step further. What if you decided not to buy into the whole consumer insanity that demands a new wardrobe every year? Or a new car? Or a bigger house with a bigger yard?

What if you decided to save more money with a goal of retiring early? Or what if you moved to a less expensive home or a part of the country where you were able to live on much less money right now?

What if you decided to start living your dreams instead of trying to buy them? How would that change your holiday plans, and your plans for the future?

If you're rethinking the way you're going to celebrate your holidays (or your future) and would like to share your thoughts, I'd like to hear them!

© 2007 Cynthia Friedlob

Real Estate Fantasyland Questions

There are standard eight-inch white ceramic tiles on the floors of the bathrooms, the kitchen and the foyer of our townhouse. A little basic math easily demonstrates that a set of four of those tiles is a bit larger than one square foot, but it's just about the right size for the average person to stand on comfortably. Would you be willing to pay more than $12,760.00 for a space the size of those four tiles? How about if you had a fabulous, unobstructed view of the ocean? Any takers?

The LA Times "Home of the Week" this past Sunday featured a house in South Laguna with a 270-degree "breath-stealing" ocean view and an asking price of $31.9 million. The house has 2,500 square feet of living space with the bare minimum of amenities one might reasonably expect in a home even in a much lower price range: "cathedral-vaulted ceilings, hardwood and marble floors, skylights, a bay window and a double-door entry. There are hand-painted tiles in the kitchen and a hand-painted mural on a wall in a private courtyard . . . a wet bar, air conditioning and two-car garage."

But there's that view. A spectacular experience, undoubtedly. And yet, is it worth $12,760.00 per square foot? The listing agent suggests that "it obviously makes most sense as a turnkey, fully furnished vacation home for two or three, if you prefer."

So at that price it's not even expected to sell as a primary residence? It's just a little "get-away" spot at the beach?

Is anyone else noticing a dramatic disparity between this listing and all the latest news about the rapidly-increasing number of foreclosures homeowners are currently facing? How many of those homeowners simply took on mortgages that they couldn't afford in order to maximize the size, or perhaps the location, of the home they purchased? I suspect that they thought they were maximizing their "lifestyles" as well. Instead, they made bad financial decisions in order to get "more" and now many of them are going to end up not with "less," but with nothing.

I also suspect that what those homeowners really wanted was more quality in their lives, not in their lifestyles. With a little thought, they might have figured out that in order to achieve the quality they were seeking, they didn't need a fancier house, or better views, or marble countertops and restaurant-quality appliances in the kitchen; what they needed was more time, more enjoyment, more peace of mind.

Maybe the buyers of this pricey beach home will end up with more of what they want. But I wonder . . . .

© 2007 Cynthia Friedlob

What Makes a House a Home: Debt and Laundry

Big surprise. The housing boom is not booming anymore, at least in most of the country. During the boom, many homeowners, including a great many first-time buyers, took advantage of easy credit (especially sub-prime loans for people with less than stellar credit histories) and loans that were structured primarily for the benefit of the lender (such as interest-only loans). While property values were climbing and interest rates favored homeowners, many people took out home equity loans to get extra cash to pay for home improvements or, I suspect in a lot of cases, just to buy more stuff.

And now, with money tightening and refinancing interest rates no longer on their side, these folks are stuck and often can't make their home equity loan payments. According to a July 3rd press release from the American Bankers Association, delinquencies in this debt category rose to 2.15% in the first quarter of this year, an increase from 1.94% last year. It's a situation that presents an ironic twist on the old rule about gambling in Las Vegas: the House always wins.

Another ironic twist is that the very next day, "Independence Day," an article by E. Scott Reckard and Andrea Chang in the LA Times about consumer debt indicates that independence is the last thing many consumers are achieving. They cite information from David Jones, president of the Association of Independent Consumer Credit Counseling Agencies:

". . . anecdotal evidence reflects more people under financial stress. . . . [CCCA] members were reporting more debt-ridden consumers unable to make monthly payments, often on mortgages with adjustable rates that now are ratcheting higher after initial teaser rates ran out."

In previous decades, people sacrificed in other areas of their lives in order to pay their mortgages and hold onto their homes. That's no longer the case. Todd Emerson, president of Springboard, a nonprofit consumer credit management organization in Riverside, California, comments:

"People today, in order to keep themselves alive, they're paying off their credit cards first rather than paying off their mortgages first in order to keep an open line of credit. . . . Many of those homeowners bought expensive properties with a 'figure it out when they get there' mentality. . . . Trouble is . . . they never figure it out."

So the final irony is that after reading all about the debt problems plaguing homeowners, I recalled that a recent LA Times (June 28) had featured this Home Section's trend update for those who want to be considered fashionable:

"Is That Evian in the Washer? Conspicuous consumption creeps into the once-humble laundry room, where stone floors, chandeliers and other luxe touches are in."

Writer Janet Eastman's article explains:

"Now that kitchens are equipped to impress a chef, bathrooms look like spas and closets can hold a diva's wardrobe, the laundry area is ready for its close-up. It's moving out of the garage and into a larger space often near bedrooms — the starting and stopping points for most laundry. The room is being outfitted with warming drawers for clothes too dainty for dryers, rotary presses to iron sheets and laundry sinks with whirlpool jets to clean bulky comforters.

And for those who miss the simplicity of a clothesline? A $3,750 indoor air-drying unit promises to deliver something close to a fresh-breeze scent."

Stone floors? Chandeliers? An indoor air-drying unit? After many years as an apartment dweller, when we moved into a house I was thrilled simply to have laundry facilities that didn't require leaving the premises. Now that we're in a smaller townhouse, I'm still thrilled about that wonderful convenience and I cope quite comfortably with a washer and dryer hidden behind louvered doors in the first floor powder room. But, as is often the case, the perspective of the wealthier denizens of the Los Angeles area is different:

"In some estates in Bel-Air and Beverly Hills, the laundry rooms are 400 square feet or larger, allowing a maid and professional ironer to work together — not a concern for most homeowners."

No, most homeowners don't have to worry about the hired help struggling to function in cramped quarters. And because perspective is always important, I have no doubt that plenty of New Yorkers would have a few choice words to share about laundry rooms of that size. Four hundred square feet does make a pretty fine apartment in Manhattan.

So, what we can conclude from all this is that consumers are paying off credit cards first, thereby jeopardizing ownership of their homes, but if they own homes and want to be cool, now's the time to fill up those credit cards to make their laundry rooms elegant. Okay, maybe I do still have one more irony left in me: doesn't it sound like a lot of homeowners are being taken to the cleaners?

(c) 2007 Cynthia Friedlob