Wednesday, June 11, 2008

A New Frugality?

In yesterday's column, David Brooks calls attention to a new report calling for a national renewal of frugality and increased awareness of the scourge of debt among the citizenry. Entitled “For a New Thrift: Confronting the Debt Culture,” released by the Institute for American Values, the report highlights the high levels of current American indebtedness. As Brooks rightly points out,

"Over the past 30 years, much of [our historic thriftiness] has been shredded. The social norms and institutions that encouraged frugality and spending what you earn have been undermined. The institutions that encourage debt and living for the moment have been strengthened. The country’s moral guardians are forever looking for decadence out of Hollywood and reality TV. But the most rampant decadence today is financial decadence, the trampling of decent norms about how to use and harness money."

I agree entirely with what I read here about the report, and with Brooks's overarching message that Americans need (and, by dint of current events, are increasingly forced) to adopt habits of thrift that have been undermined by a concerted effort to increase profligacy over the past 30 years.

However, there is something amiss in his analysis: namely, in the first place, a gauzy sentimentality about the historic thriftiness of Americans that has purportedly only been undermined over the past 30 years; and secondly, a complete absence of any context to explain those what has occurred over those past 30 years or so.

Brooks cites the builders of our nation as frugal people who encouraged thriftiness among the citizenry and their flocks: "The Puritan legacy inhibited luxury and self-indulgence. Benjamin Franklin spread a practical gospel that emphasized hard work, temperance and frugality. Millions of parents, preachers, newspaper editors and teachers expounded the message. The result was quite remarkable." It's curious, to say the least, that Brooks cites as our Founders the Puritans and Ben Franklin, without mentioning the founders usually invoked - the Founding Fathers. I assume this is not by accident, given that a number of our Founding Fathers advanced an idea of government and commerce based centrally on the ability of the nation and individuals to accumulate debt. For Alexander Hamilton - the ascendant Founder particularly amongst current "conservatives" - debt and concomitant putting one's bills off to the future was a central part of the American way. Many of the great early battles of the Republic were fought over the banking system, with political figures ranging from Thomas Jefferson to Andrew Jackson and later to William Jennings Bryan fighting against an array of dominant powers that sought to extend the credit regime into every corner of the nation. Painted with a broad brush stroke, it has historically been the "commoners" who have exemplified the basic virtues of frugality and living within means, while it has been our "financiers," "industrialists" and "East Coast" interests who have encouraged a national and increasingly international economy in which frugality would be anathema.

What happened over the past 30 years is not a wholesale transformation of our economic system - indeed, it could be said that we are reaping the fruits of its long-term logic - but rather, the triumph of the elites in persuading the commoners to throw off their longstanding steady habits. The introduction of credit cards and vast arrays of easy loans - including the first real use of home equity loans, and the behavior of using one's home as a piggy bank - saw its beginnings during this period.

But, let's think a bit deeper about what was happening 30 years ago. Brooks fails to mention that three decades ago happens to coincide with the beginning of the Presidency of Ronald Reagan, one of Brooks's great heroes. At the time of Reagan's death, Brooks rhapsodized over Reagan's transformation of American conservatism represented by figures such as Russell Kirk and Richard Weaver who stressed "order," "stability," and a host of values in the face of the vulgarity and barrenness of much of modern culture. Brooks implicitly celebrates Reagan's rejection of that conservatism, instead praising Reagan's optimism - even celebrating that conservatives have assumed the banner of "Progress" that was once the watchword of Left progressives like Woodrow Wilson. He lauds Reagan's economic views that went on to inspire free-market dogmatists like Julian Simon "who rhapsodized about entrepreneurialism and wealth creation." And, who additionally told us we will never run out of anything. (Would that Ehrlich have asked for a slightly longer time frame - he would have cleaned Simon's clock looking at the prices of commodities today.)

What should strike one about Brook's paean to Reagan and Reaganism is the praise of the willingness to live as if there were no consequences tomorrow for the actions of what one does today. And this is exactly the mindset that needed to be inculcated among the commoners beginning in the 1980s in order to keep the sputtering American economic machine going. In the 1970s the United States did in fact begin to confront material limits to its growth, in particular the inability any longer to be the swing producer in crude oil, the life-blood of the modern industrial economy. Only as a consequence of its willingness to encourage widespread indebtedness - including national debt, that greatest legacy of Reaganism, one that his disciple Bush II has learned well - was America able to keep its economic machine humming. All the while, we were, in fact, becoming poorer:

Brooks is absolutely right that traditional habits of thrift should be inculcated. However, he - and many other so-called conservatives - should be cognizant and more than slightly ashamed at his complicity in the three-decade old destruction of those values of thrift that were a central part of modern "conservatism." (Not that we should think for a moment that our "liberals" haven't been as complicit - their valorization of "lifestyle" freedom has contributed just as mightily as our "conservatives" to our contemporary hedonism and neglect of the consequences our actions upon future generations. I'm tougher on conservatives because you'd think they'd know better, since their political label consists of the word "conserve"). We are now in the midst of a great redefinition of what it means to conserve, and the people who seem still not to have gotten the message are most of our "conservatives" who are defending nothing other than the legacy of Woodrow Wilson (including a good deal of his international dream of world democracy) - the utopian vision of Progress that requires no costs and has no consequences.


QP said...

. . ."the great redefinition" a.k.a. "The Party's Over"

Ryan said...

I wholeheartedly agree. But it also seems to me that the conservatism of Kirk (and especially Babbitt) that would prefer self-discipline and restraint to profligacy does so not just on instrumental grounds (i.e. the effects on our indiv. and collective bank accounts). In other words, there is also something inherently impoverishing to a human life about material indulgence. It seems to me that one of the greatest consequences/costs of such behavior is that it impoverishes the spirit as well.

QP said...

Ryan said: . . ."there is also something inherently impoverishing to a human life about material indulgence. It seems to me that one of the greatest consequences/costs of such behavior is that it impoverishes the spirit as well."

Ms. Paynter shares your view and concurs with Prof. Deneen's thesis:

“The sad thing is our state has substituted a false hope for an exciting future”. -Suzii Paynter, Director of Citizenship and Public Policy for the Christian Life Commission of the Baptist General Convention of Texas, on the Texas Lottery, which is seeing its sales decline as the cost of living increases.

brierrabbit said...

If you turn on the a.m. radio talk shows, you will hear Rush Limbaugh, Hannity, and the others still harkening back to the, well lets, see. The Kennedys already have "Camelot, what would we call the Reagan era. "The Land of the Lotus Eaters"? To the "conservative" talk show hosts, it's more growth, more drilling, more of all the same things that got us into this predicament, in the first place. Never, ever, do you hear anything about frugality, conservation, moderation, etc. from these people. Republican leaders still think that leveling West Viginia, for "clean coal", drilling everywhere else, that we can find a puddle of oil, will solve the problems we have. None of which will work, because it hasn't changed the behavior that got us here. We are debt, and materialist junkies.

Anonymous said...

Prof. Deneen,

I agree, but restrospective blame-casting seems beside the point. The solution, IMHO, is a progressive tax on personal expenditure (income minus savings), instead of on income. To define "saving" is problematic, but we can quibble over that, and over the degree of progressivity, in the course of normal politics. The urgent need is for a commitment to the principle -- which should greatly discourage consumer debt: to spend more by borrowing would increase one's average tax rate, not merely the base on which one is taxed.

This idea has been floating around for a long time, and in the 1970s David Bradford did work that greatly increased its practical feasibility.