LONGMONT, Colo. — Dave Ramsey is part of the vast and growing self-help industry that includes a diverse group of gurus including Deepak Chopra, Stephen R. Covey, Tony Robbins, Dr. Phil and Suzanne Somers. Mr. Ramsey may not be as well known as some of the other leaders in the self-help field but he has a radio audience in the millions and several best sellers to his name. In short, he has influence with the public.
Mr. Ramsey delivers a down-home message to which we should all take heed. Don’t be “stupid.”
His niche in the self-help marketplace is personal finance. He preaches a gospel of personal discipline and fiscal austerity as the path to a debt-free life and personal transformation – greater self-esteem, better relationships and freedom. The wisdom behind his life-changing prescription is not his own, Mr. Ramsey writes in The Total Money Makeover. It is derived from “God and grandmothers.”
It’s hard to argue with the ideas Mr. Ramsey champions. His recipe boils down to a simple idea captured so bluntly in an old Saturday Night Live skit starring Steve Martin in which a satirical guru advises over and over again, “Don’t buy stuff you cannot afford” – to which Steve Martin replies, “Sounds confusing!”
Mr. Ramsey’s recipe for personal transformation is based on a common, though perhaps not explicitly articulated, self-help philosophy: Individuals can’t change the world. The best a person can do is choose how to respond to the situations and conditions he encounters.
Mr. Ramsey’s philosophy resonates broadly and deeply in the United States because it rejects the notion that people are “victims” of their circumstances. Each of us has the power within to make the most of our lives no matter what hand of cards we are dealt. It is simply a matter of embracing personal responsibility and a little bit or gumption.
In Mr. Ramsey’s world, people who suffered from the housing bubble and shady mortgage practices have no one to blame but themselves. When lenders agreed to loans that people clearly couldn’t afford, the consumer should have said emphatically, “I won’t buy stuff I can’t afford.”
The same principle applies to those who have wracked up mountains of credit card debt. People who pay exorbitant interest rates to credit card companies have no one to blame but themselves. Mr. Ramsey unmercifully reminds people on his radio show that video games, for instance, are a luxury, not an entitlement. Heck, from Mr. Ramsey’s point of view a second family car is a luxury item if a person can’t afford to pay for it with cash.
Again, it’s hard to argue with Mr. Ramsey’s advice. A person gives up her personal freedom if she succumbs to the siren song of easy credit. Mr. Ramsey inspires people to forgo these temptations by drawing common sense distinctions between “need” and “want.”
But, there are those who find fault with Mr. Ramsey’s advice as well as the other self-help gurus. Barbara Ehrenreich is among those who take exception with the self-help movement in her book Bright-sided: How Positive Thinking is Undermining America.
Critics of the self-help movement argue that an over-emphasis on personal responsibility ignores the power institutions can wield over people’s lives. In the case of finance, for instance, Mr. Ramsey’s austerity message, critics suggest, lets big corporations – banks and credit card companies – off the hook.
People shouldn’t cut up their credit cards, the self-help critics say, they should clamor for their state and federal legislators to impose stricter reforms. Reform and regulation, not individual discipline, are requisite to protect consumers from deceptive and unethical (though perhaps legal) practices employed by big corporations.
It is hard to defend the practices of big banks, mortgage mills and credit card companies. Anyone who has tried to wade through the fine print intuitively knows there’s some type of scam hiding in the text. Mr. Ramsey doesn’t defend banks or credit card companies. He calls the fees people pay to these big corporations a “stupid tax” – i.e. individual consumers who pay unreasonable fees are “stupid.”
Herein lies the rub that cuts to the heart of many public policy debates regarding consumer protection laws: Is the bigger problem that individuals are “stupid” or that big corporations are deceptive, perhaps even corrupt? Depending on where a person comes down on this question will determine the types of consumer protection laws, if any, he will support.
Conservatives tend to align with the self-help gurus like Dave Ramsey and focus their attention on the need for individuals to be more responsible – a.k.a. “smarter.” Liberals, on the other hand, tend to focus on mitigating the power of big institutions such as corporations so to limit the number of individual consumers who are “victimized.”
This, all too often, is where policy debates get stuck: Liberals accuse “pull up the bootstraps” conservatives of being callous and blind to corporate bullies. Conservatives accuse “namby-pamby” liberals of being too soft hearted and blind to individuals shirking personal responsibility. These types of tactics are a good way to promote books with clever titles but they do nothing to solve problems.
There is much being written about political rhetoric since the event we now collectively know as “The Tragedy in Tucson.” One of the ideas that have been lost in the heated debates of the past decade-plus is the notion of balance. It’s become more important to defeat political opponents than to find reasonable middle ground. Perhaps the dueling pendulums will begin to come back toward the middle.
The Dave Ramsey way makes sense. Individuals do have the power within to make wiser choices and avoid the “stupid” tax so many corporations prosper from when we pay. It also makes sense to force corporations to be more transparent. A healthy free market economy depends on readily available and good information.
As individuals, we can choose to make the best of our circumstances. So to, as individuals, we can choose to change our circumstances.
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