As the United States economy crumbles, people have pointed fingers in all directions.
Few as of yet, though, have dared to admit that our crisis stems from a fault in the American mind-set.
Over the past 20 years, American society has confused reality with fantasy. We ignore what we can have and focus on what we feel we should have. We feel that we all deserve a big-screen television, a car and a house, and we rarely ask if we can afford these luxuries.
Specifically, the belief that most Americans deserve to own a home led to our current economic meltdown. When house prices began to rise, it provided a perfect excuse to increase home ownership: Homes were not only places to live but also investments!
Even if a mortgage could not be repaid, the home could be sold for more than it was purchased! That extrapolation, that housing prices would continue to rise, rationalized every action that created our current crisis.
As the housing bubble grew, Americans viewed homes as entitlements. The government was eager to encourage home ownership; financial institutions hurried to provide mortgages and few questioned whether those houses could be afforded. Of course, each aforementioned group also benefited from participating — people got homes with low down payments, elected officials got votes and banks got larger profits. Those who embraced the homeownership mind-set were wildly successful, working for a greater good. A roof above every head.
But, you may ask, could someone have spoken up and warned others of the danger of the bubble? Unfortunately, to do so would have been impossible. A family that chose not to buy a home would have been ignored, a politician who discouraged increased homeownership would not have been re-elected and a mortgage lender who refused to issue mortgages would have lost market share and profitability. Even warnings from respected economists, like Yale’s own Robert Shiller, were brushed off by a society that was both unable and unwilling to compromise its distorted views of reality.
What about us at Yale? We do not have any of these “entitlement issues,” do we?
But let’s be realistic: We at Yale are just like everyone else. What do we feel we deserve? We deserve to be investment bankers, with six-figure salaries right out of college. We have a bubble of our own. Each year, a greater number of Yale College graduates have entered the financial sector, so many that it seemed like the only reasonable thing to do. Finance has become the destination of choice for Yalies in search of riches.
Now, those jobs are gone, and the Yalies who flocked to investment banks will be forced to look elsewhere for employment. This process will be painful, but it cannot be avoided.
American society is now being forced to undergo an attitude adjustment. We adopted a faulty mind-set, and now we must modify our expectations and redetermine what is possible and what is not. For Yalies, the glory days of the investment banker are likely over, and we, too, need to reassess our prospects for the future.
Just as we started our own dot-coms and then we scurried to Goldman Sachs, we are sure to find other pots of gold in the future.
Marcus Shak is a freshman in Pierson College.