Sunday, January 25, 2009

In defense of Ben Stein

Yves Smith accuses Ben Stein of "ask[ing] us to feel sorry for wildly irresponsible people," because of Stein's New York Times column today:
Not long ago, a woman in California called me for advice. She is divorced, with two children, and has a series of interlocking financial problems.
She lives in a lovely home in a stylish inland enclave. It has an interest-only mortgage of about $2.2 million that requires a payment of $12,000 a month, very roughly. It was last appraised at $2.7 million, but who knows if it’s now worth anything remotely close to that price.
The woman, whom I’ve known since she was a teenager, has no job or other remunerative employment. She has a former husband, an entrepreneur whose business has suffered recently. He pays her $20,000 a month, of which roughly half is alimony and half child support. The alimony is scheduled to stop this summer.
Is Stein asking us to "feel sorry" for this woman? No:
What could I say? I did the best I could, but I had to tell her that she was on very thin ice.
This is the closest that Stein, a gracious human being, will come to saying, "Sweetheart, you're screwed, blued and tattooed." What Stein is saying -- the moral of the story, as it were -- is that even people we think of as "rich" can get themselves in over their heads. Here is a woman living in a mansion (even in California, $2 million buys a lot of house) and receiving nearly a quarter-million a year in alimony, and yet she is on the verge of bankruptcy.

Stein writes with a sort of Gestalt technique, allowing the reader to draw his own conclusions. He is too much the gentleman to say directly that this woman, his longtime friend, is an irresponsible twit. Rather, he turns without comment and begins relating his own father's words of wisdom about the importance of such sturdy virtues as diligence, thrift and self-reliance -- virtues his soon-to-be-impoverished divorcee friend quite obviously lacks.

The big risk in the Gestalt technique of essay-writing is that some people might miss your point, which Yves Smith does spectacularly:
Stein is trying to give us a morality tale of sorts, but his object lesson is so far removed from the most common manifestations of the debt disease that it sheds no light on the issue.
Smith is angry at Stein for using this rich woman as an example of a problem of which she is, in fact, a very good example: Anyone who lives above their means is at risk of disaster, however great their means may be.

Given that Stein's larger (implied) point is that America's tremendous wealth hasn't prevented America from suffering an economic disaster caused by excessive debt, the woman he chooses as his example is an apt choice. And given that Barack Obama and the Democrats now plan to "fix" our problem with another $800 billion or so in deficit spending, it seems that Yves Smith is not the only one who has missed the moral of Stein's story.

(Cross-posted at AmSpecBlog.)


  1. Anyone with half a brain realizes if outgo exceeds income consistently, you will be in financial trouble no matter how much money you make. Unhappily, this country appears to be full of people who simply can't count. And, judging by the paper's financial problems as well as the clueless columnists, a lot of these people work at the NY Times.

  2. I enjoy Yves Smith and her site and I visit it regularly, yet she does have a problem connecting the dots sometimes. After all, her site is almost entirely dedicated to chronicling the coming financial apocalypse that will leave us sleeping in rubbish dumps and subsisting on dirt while we wait for the next bark and twig shipment from North Korea. At the same time, she can’t help constantly pointing to the most alarmist environmentalist global warming hooey as something that’s of imminent concern as well. Hell-lo!! If we’re living in the streets and lining up for soup then we’re not going to have money to squander on clean coal or wind-powered cars or bovine fart de-carbonators. It’s a bit much to be a prophet of an impoverishing global financial meltdown while simultaneously asking our hearts to bleed over the fact that rising temperatures have shortened the ski season in Gstaad.