Today’s problems were addressed several years ago

By John Cunniff The Associated Press
Tuesday May 15, 2001

NEW YORK — If you have a decent memory, you will experience the sensation of reliving events, including such diverse public drives as conserving energy, saving for retirement and simplifying taxes. 

All these and many, many more educational efforts had rather short-term results, the problem being that most Americans, or so it seems from the evidence, are more inclined to forget rather than to remember. 

For example, saving for retirement? 

In newspapers three decades old you can find admonishments about the need of doing so. For years it was the smart thing to do. But now, amid constant reminders and great prosperity, the saving rate is below zero. But, you say, people are indeed saving through 401(k)s and similar tax-advantaged arrangements and by investing directly in stocks.Yes, but they’ve forgotten warnings about pushing prices to foolish heights. Buyers have treated warnings about risk as neurotic residue from the past. Forgotten also was the stockbroker’s requirement to “know your customer.” And the admonition to customers to know your broker. 

How about more fuel efficient cars? The first shock for gasoline consumers came three decades ago with the actions of a production-fixing cartel called the Organization for Petroleum Exporting Countries to withhold oil from the market. 

The resulting price shock forced conservation upon Americans. Fuel-efficient cars were created. Additional insulation was decreed for newly built homes, and solar heating even had its day in the sun. Conservation seemed permanent. 

But now, a few decades later, relatively more prosperous Americans show a robust desire for gas-hogging sport-utility vehicles that satisfy the desire for utility but not for fuel or price efficiency. And solar heating, once thought to be “in,” barely gets a peak inside. 

Do you recall the campaigns for simplifying taxes and for clear explanations in borrowing and savings terms? These too are not just decades old but often have been reviewed, resurrected and ignored. 

Most people, it seems reasonable to assume, would like to understand what they are doing when they confront a tax form or a credit-card truth-in-lending statement. It is unlikely that they do. Very unlikely. 

A report this month from the Treasury Inspector General for Tax Administration found in a survey that the Internal Revenue Service’s own tax assistants gave inappropriate answers 73 percent of the time. 

The sorry results of these programs raise questions about the ability of service providers such as lenders and IRS personnel to explain details without adding to rather than reducing the confusion. It’s also worth studying how a new generation seems unable to learn from the errors of the old. The latter question applies not just to ordinary Americans but to those who consider themselves experts – such as real estate developers. 

Those who risk huge amounts of money on developments often do so because of infinite trust in their egos and expertise. These, they assume, make them different from those who failed in the past. 

John Cunniff is a business analyst for The Associated Press