Posts tagged with: thrift

Blog author: dpahman
posted by on Monday, October 22, 2012

Recently at Big Questions Online, Barbara Dafoe Whitehead answers the question, “Does a culture of thrift cultivate generosity?” with a solid yes, documenting the history of thrift and generosity in the United States and their subsequent and unfortunate decline in recent years:

By the 1960s, however, the coalition of national organizations promoting thrift ceased their activities. Schools gave up their savings programs. And American households increasingly turned to consumer debt rather than savings to finance their wants and needs. The savings rate, which stood in double digits as late as the early 1980s, fell to near zero in 2005 and has since rebounded to a still anemic 4.4 percent.

As a consequence, thrift has lost much of its cultural force. Few schoolchildren today have even heard the word, much less are able to say what it means. A teacher of my acquaintance reports that her students, rich, poor and in-between, customarily throw their loose change into the trash along with their lunch leftovers. Apparently, they are clueless as to the value of their nickels and dimes when their customary medium of exchange is the “swipe” card.

Read more . . .

Thrift almost seems like a lost virtue among much of our governing class. It is also true of the general population. We don’t have to just look at our staggering public debt, but consumer credit card debt tells the story too. In a past post on the virtue of thrift, Jordan Ballor reminds us that “thrift is one of the things that separates civilized capitalism from savage consumerism.”

When I worked for U.S. Congressman Gene Taylor in Mississippi, we had a lot of second-hand office equipment. The boss was always serious about saving tax dollars. I know there are still representatives out there that take thrift seriously. However, we should also let the illustration provided by Amity Shlaes on Calvin Coolidge over at National Review sink in, especially given some of the lavish entertainment we hear about in Washington:

For Coolidge, no savings was too small to overlook. Recently William Jenney, the archivist for the state of Vermont at the Coolidge homestead, pulled out for me an old looseleaf notebook. It contained the White House housekeeper’s journal of outlays for White House entertainment. The White House, even then, received tens of thousands of visitors a year; the Coolidges hosted Col. Charles Lindbergh and Ignacy Padereweski, the pianist and politician. There were many days when Coolidge shook 2,000 hands. But he also kept an eye on the budget. For 1926, the housekeeper itemized each purchase for each event; the total was $11,667.10. For 1927 she managed to get the amount down to $9,116.39. The president reviewed this and wrote her a note: “To Miss Riley, very fine improvement.”

Shlaes, who has a forthcoming book on Calvin Coolidge coming out soon, was interviewed in Religion & Liberty’s 2009 fall issue. She discusses her book The Forgotten Man and the Great Depression in the interview.

I have also touched on Coolidge on the PowerBlog. In a post titled “Keep Cool with Coolidge,” I linked to a great recording on Coolidge talking about the cost of government spending. Have a listen:

Audio clip: Adobe Flash Player (version 9 or above) is required to play this audio clip. Download the latest version here. You also need to have JavaScript enabled in your browser.

I introduced this week’s Acton Commentary yesterday with some thoughts about “The Audacity of Austerity.” In today’s “‘A’ for Austerity: The New Scarlet Letter,” I take to task the attitude embodied by Paul Krugman’s vilification of proponents of austerity measures.

Most recently Krugman called such advocates “debt moralizers,” implicitly drawing the connection between austerity measures and “puritanical” virtues like thrift. In this Krugman follows in the spirit of Nathaniel Hawthorne, who indeed has much to answer for in forming the popular, and mistaken, understanding of the Puritans and joyless, dour, and rigid.

But the joke is, of course, that in denouncing the “debt moralizers” Krugman is himself “moralizing.” It just so happens that instead of moralizing against wanton debt and deficit spending, he is moralizing against commonsense “puritanical” wisdom. He is moralizing against those who dare to think that government bureaucrats and the public intelligentsia aren’t fit to rule the political economy by virtue of their “expertise.”

Krugman’s message amounts to the view that the hoi polloi don’t really know what’s best for them, and it is up to the few enlightened planners of civilization to run things properly.

If I might be allowed to make another literary comparison, in this Krugman is a bit like Shift, the Ape from The Last Battle, the concluding book of C. S. Lewis’ Chronicles of Narnia series. The book beings by describing the relationship between Shift the Ape and Puzzle the Donkey (or Ass), and although both would say they are friends, the nature of the friendship is rather suspect, for “from the way things went on you might have thought Puzzle was more like Shift’s servant than his friend.”

Indeed, it quickly becomes clear that Shift uses his superior way with words and quick wit to manipulate Puzzle into doing what he wants. All the while Shift reiterates the same message to Puzzle.

Puzzle never complained, because he knew that Shift was far cleverer than himself and he thought it was very kind of Shift to be friends with him at all. And if ever Puzzle did try to argue about anything, Shift would always say, “Now Puzzle, I understand what needs to be done better than you. You know you’re not clever, Puzzle.” And Puzzle always said, “No, Shift. It’s quite true. I’m not clever.” Then he would sigh and do whatever Shift had said.

This all too often is the message from K Street (and Wall Street) to Main Street: We understand what needs to be done better than you. On the heels of yesterday’s election, it is up to the new legislators not to simply sigh on behalf of their constituents and go along with the way things always go inside the Beltway.

As I argue in today’s commentary, contrary to Krugman, we ought to think of the ‘A’ for austerity not as a scarlet letter but rather as a red badge of political courage.

Political commentators have spilled a septic field of ink explaining what drives the Tea Party movement; and, sure, the movement is complex and varied, resisting any single attempt to blah blah blah. But the core of it boils down to the Saturday Night Live skit below. The analogy runs like this: The Steve Martin character and his wife represent the ruling political class in Washington; and the Tea Party is the book author.

I realize it’s not a perfect analogy. If it were a perfect analogy, the book author wouldn’t be nearly as detached, because the couple has been spending the author’s money using a credit card he had idiotically loaned them a few years before. Oh, and the husband would be accusing the book author of racism, or of being a flyover country yahoo without the sophistication to understand Keynesian economics or something.

[Hat Tip to Luke at Cornerstone University for the SNL skit.]

Blog author: kschmiesing
posted by on Thursday, October 16, 2008

While efforts to explain the financial crisis will continue for years (historians are still debating the causes of the Great Depression, eight decades later), it seems certain that its genesis cannot be fully understood without some recourse to the moral dimension of human action in the economy. Acton Institute commentators—Jonathan Witt, David Milroy, Sam Gregg—have already weighed in on the question.

Economists have long deplored the poor savings rate in the United States, arguing that our ever-increasing debt load (national and personal) would eventually come back to haunt us. British intellectual Peter Heslam points out that this problem is essentially moral, a failure to value the traditional virtue of thrift.

He writes:

Hebrew and Christian scriptures support a theology of thrift. Literally, thrift means ‘prosperity’ or ‘well-being’, meanings encompassed in the Hebrew notion of shalom, which is central to the biblical theme of redemption. True, Jesus warned against laying up treasure on earth. But his warning is against greed and miserliness, which undermine thrift.

The only puzzling note Heslam hits is his final exhortation for government to push the sale of bonds. Granted that treasury bonds represent savings on the part of their buyers and granted that this is a better use of income than gambling, the other side of the coin is that bonds represent government borrowing from its people—not a good strategy for decreasing national indebtedness.

Better to put the money into stocks, corporate bonds, even passbook savings and certificates of deposit. This kind of saving is investment, the lifeblood of the market economy.

(The point here dovetails with Jordan Ballor’s endorsement of stewardship, posted as I typed this.)

Picking up on themes we’ve touched on here, here, and here, last week NYT columnist David Brooks weighed in on the culture of debt in the United States.

“The social norms and institutions that encouraged frugality and spending what you earn have been undermined,” he writes. “The institutions that encourage debt and living for the moment have been strengthened.”

Brooks has his own proposed solutions for this cultural shift. Elsewhere Richard Posner and Gary Becker debate whether there has been a paradigm change and if so what it means.

I submit that a good place to start to look would be religious institutions. Max Weber had a profound insight when he pointed out the specifically theological backgrounds (even if he didn’t get the particular backgrounds quite right) and their impact on morally-informed behavior make all the difference between someone like Richard Baxter and John Wesley on the one hand and Benjamin Franklin on the other (the easy cloak vs. iron cage comparison). A divine mandate inspires and motivates in ways other things simply aren’t able.

Brooks wants us to return to Franklin-esque “bourgeois virtues.” But it may just be that those secular virtues don’t have cultural staying power on their own, and when divorced from religious undergirding become a waystation on the way to rampant consumerism.

But hey, at least this guy has figured out a way to make the economic stimulus package permanent (unlike the Bush tax cuts).

Blog author: jballor
posted by on Tuesday, June 3, 2008

Is this supposed to be capitalism?

Geoff Colvin writes that a motivating factor in the recent crash in corporate profits, as well as the sharp decline in home values, was the phenomenon that “people began to believe that the more they borrowed, the better off they would be. Their thinking went like this: With the cost of capital so low and asset prices rising steadily, risk was evaporating.”

The precipitating cause of the downturn was that consumers “began to live within their means, shutting down the profit-growth machine.”

Any business or industry profit model that depends on consumers driving themselves deeper and deeper in debt is morally flawed and economically unsustainable. That’s not capitalism, that’s consumerism.

Compare the latter with the former, represented by this statement of a first principle of capitalism, “Thrift the First Duty”:

…thrift is mainly at the bottom of all improvement. Without it no railroads, no canals, no ships, no telegraphs, no churches, no universities, no schools, no newspapers, nothing great or costly could we have. Man must exercise thrift and save before he can produce anything material of great value. There was nothing built, no great progress made, as long as man remained a thriftless savage. The civilized man has no clearer duty than from early life to keep steadily in view the necessity of providing for the future of himself and those dependent on upon him. There are few rules more salutary than that which has been followed by most wise and good men, namely, “that expenses should be less than income.” In other words, one should be a civilized man, saving something, and not a savage, consuming every day all that which he has earned.

You don’t need to agree with Andrew Carnegie about everything to recognize the truth of these statements. Thrift is one of the things that separates civilized capitalism from savage consumerism.