The people who created this country built a moral structure around money. 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.
The United States has been an affluent nation since its founding. But the country was, by and large, not corrupted by wealth. For centuries, it remained industrious, ambitious and frugal.
Over the past 30 years, much of that 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.
Sixty-two scholars have signed on to a report by the Institute for American Values and other think tanks called, “For a New Thrift: Confronting the Debt Culture,” examining the results of all this. This may be damning with faint praise, but it’s one of the most important think-tank reports you’ll read this year.
[i]Foundations and churches could issue short-term loans to cut into the payday lenders’ business. Public and private programs could give the poor and middle class access to financial planners. Usury laws could be enforced and strengthened. Colleges could reduce credit card advertising on campus. KidSave accounts would encourage savings from a young age. The tax code should tax consumption, not income, and in the meantime, it should do more to encourage savings up and down the income ladder.[/i]
Amen to all of the above. The debt culture has cost us dear and will continue to do so.
[url=http://catholicandreformed.blogspot.com]Catholic and Reformed[/url]
Very interesting…and, of course, this trend escalated hand in hand with other relaxations on healthy society norms…
“Over the past 30 years, much of that has been shredded. The social norms and institutions that encouraged frugality and spending what you earn have been undermined.”
Hmm…the past 30 years, the past 30 years…what could it be that caused all the fuss? Say, isn’t that when the Baby Boomers started taking the reins of power?
Not only the Baby Boomers, but the shifting from a blue collar workforce to a white collar workforce. Techno-industry has led to big economic shifts in our society. For the first time, the middle class can realize economic gain by sitting at a desk typing on a computer. The end of the week brings a paycheck, but nothing one can take a child to, point to and say “See? Daddy helped build that”.
The big cultural turning point came with Ronald Reagan becoming president in 1981. Cause, effect, or coincidence? You can debate that. But flaunting wealth became socially acceptable in a way it had not been since the Gilded Age.
_ _ _ _ _ _ _ _ _
Sick-Tired [#3]: In 1981, Baby Boomers ranged in age from 17 to 35—hardly on the verge of “taking the reins of power.” Except in your mind.
In any event, if your accusation were correct, we would expect to see evidence that succeeding generations are more generous, more willing to work hard, and less narcissistic than their Baby Boomer predecessors. The evidence points in the opposite direction.
Waning memories of the Great Depression certainly played a role in the burgeoning McMansion Mentality.
By the mid-1980s you could even see some financial gurus (unwittingly) using the rhetoric of the 1920s stock market boom. They wrote glowingly about a New Era in which we had overcome the ups and downs of the business cycle.
Finally, a David Brooks column that I can substantially agree with. I’ve never understood the debt culture myself. I went to college, got a job, lived and traveled on three continents…all without a credit card in my wallet. Yes, there were times that it was an inconvenience, but nothing compared to the crushing burden of high-interest debt. If there was something I wanted, I saved for it. Period. I got my first credit card when I was well into my 30s, was mature enough to manage it properly and largely because I wanted to build a credit history to qualify for a mortgage. People look at me like I’m insane when I tell them I’m saving for my children’s college instead of assuming the cost will be foisted onto taxpayers through grants, loans and scholarships.
There are lots of reasons, in my opinion, the debt culture exists. The celebrity culture has a lot to do with it, and the marketing of upscale products in the mass media. Government also creates huge moral hazards with its endless bailouts of businesses and individuals who make stupid financial choices, poor business decisions and foolhardy decisions on where to build. And that doesn’t even mention the problems created by Social Security, Medicare and Medicaid.
Everything today is geared to discourage thinking and acting for the future.
Um, 2008 – 30 yrs. = 1978…not 1981. According to the article, the trend started during the Carter years, not the Reagan years. Nice try at revisionist history.
The Baby Bust generation was born between 1958 and 1968. http://www.babybusters.org/graph.htm
http://www.babybusters.org/debunk.htm
35 years old is about right for [b][i]beginning[/b][/i] to take the reigns of power. That means that the beginning of the trend in the article coincides with the beginning of the Baby Boomer generation beginning to take power…just as I said. If you are a Boomer, grow up and take responsibility. As for the current economy…who is in charge? What demographic group is Federal Reserve Chairman Ben Bernanke from? He was born in 1953…Boomer. How about President George Bush? He was born in 1946…Boomer. I could go on and on…and on, but what’s the point.
Here, read this letter: http://www.lewrockwell.com/orig7/crovelli8.html
I think it was television. TV has subtly insinuated that everybody else in the nation, including folks who are young, single, or who work at jobs that would normally be low wage, have large, beautifully appointed homes, the sort of body that comes with hours spent at the gym, rather than working overtime, and plenty of free time to spend “emoting “with their significant others.
We don’t have TV in my home, and everytime I go on vacation and see advertisements, or ordinary children’s programming it is a culture shock. Not only are the kids dressed in a fashion that would have been considered indecent 20 years ago, but they act spoiled, they lie and sneak around without thinking twice about it, and their parents (who apparently have unlimited free time and money) put up with it.
I used to wonder how it was that not only the folks on TV, but other folks in the neighborhood had gigantic cars, homes, boats etc. and we (who could reasonably expect to have higher incomes then they) couldn’t afford it. I had previously assumed that they were better at managing their money than myself. (Certainly my kids assumed this). It had not occured to me that people in their right minds would go into debt for toys. But then, I don’t have ads streaming into my home saying “charge it”.
Irenaeus,
Actually, the problems with conspicous consumption started in the 60s under Kennedy and Johnson and it’s underpinnings start even earlier than that. Under democratic leadership, the US allowed peopel to deduct interest charges from credit cards. Under the Reagan tax reforms, interest on credit card debt was no longer tax deductible for individuals or families.
Having said that, the concept that we spend more than we make is not a republican/democrat or conservative/liberal problem. It is a human problem. We need to get it into people’s heads that debt is bad. Debt kills financial futures and it destroy’s marriages and people. While there are times to go into debt (purchasing a home or financing college may be among the few times), the idea that we should normally carry charges on our credit cards or that we should be upside down on our automobiles or homes is terrible. What we need now is a good dose of financial realism to relearn the lessons we’ve forgotten.
YBIC,
Phil Snyder
[url=http://deaconslant.blogspot.com]I do not believe because I understand. I believe in order that I might understand[/url]
[b]Baby boomers going bankrupt at faster rate[/b]
Teaser: “The youngest Americans, meanwhile, had a drop in filings, with 4 percent of Americans under the age of 25 filing for protection from creditors in 2002. That fell from 11 percent in 1994.”
http://www.msnbc.msn.com/id/18335371/
[b]Spendthrift Boomers Face Perilous Retirement: McKinsey[/b]
Teaser: “The net effect, said the report, is that boomers carry far more debt than other generations.”
http://blogs.wsj.com/economics/2008/06/05/spendthrift-boomers-face-perilous-retirement-mckinsey/
[b]Most Baby Boomers are financially unprepared for a potential disability, survey finds[/b]
Teaser: “”Baby Boomers have too much debt and not enough savings to weather even a short-term disability,” said Karen Ignagni, President and CEO of AHIP.”
http://hr.cch.com/news/hrm/060208a.asp
Baby Boomers ARE the debt culture.
I never did understand the debt culture either. I got my first credit card at the age of 29, mostly so I could pay for hotels or rentals when I went to a business conference. I got my first (second hand) car at 27. Until then, I paid cash and rode my bicycle, and lived in cheap, efficiencies close to work that I ride my bike to. I learned to walk at night swinging a club, and walking in a brisk no-nonsense fashion that discouraged folks that might wonder if a medical resident was worth robbing. I never bought fancy clothes either. I lived in scrubs and t-shirts. But then, when you earn a salary of 14,000-19,000 and have student loans to pay off that’s what you do.
But, I will say that I was definately not on “the power track”. The folks who were groomed to be chairmen, dressed well (presumably on credit), entertained (presumably on credit) and had trophy wives, cars and homes that impressed folks who mattered. I just thought they were independantly wealthy or something. I never figured out how the game was played when I was young, and by the time I was old enough to understand it (in my late 30’s I no longer cared about such stuff.
Wait, didn’t the dude in the movie say that greed was good? Or was that on the radio?
Greetings.
My own introduction to the pervasiveness of Debt Culture:
In 2002 … not entirely by choice … I cut up my credit card (only had one), paid my debts down to zero, began living frugally and saving as much as I could manage. After a while, it became second nature, and while I didn’t always have what I wanted, I made do better than I thought I would.
Last November, I applied for a loan to replace my old POV. Actually, I could have paid cash for the one I wanted, but preferred not to. Surprise, surprise … I had no FICA score. None at all. I couldn’t get approved for a loan at less than 18%, since I had no recent “credit history” (that is, debts) — never mind that I’ve never defaulted on a debt in my life.
It eventually worked out, and I’m working on deliberately acquiring some easily-manageable debt.
I understand the purpose of a credit history, but I hadn’t stopped to think that being debt-free and liquid long enough would take me “off the grid” financially and actually make me less respectable.
regards,
JPB
Saick & Tired, I don’t know what generation you come from but what is your problem? You seem to only want to blame someone for your problems. We are all in this and what to do about it is the question, not who did it.
Anyone remember the movie with thst phrase “Greed is good”. Many took it as their mantra.
We have ONE credit card. We take it with us on trips to cover unforseen emergencies (car trouble; hospital visits from accidents; etc.). We pay it off as soon as we can and don’t use it again until the next trip.
The only other thing we use it for is if we are registering for a hotel online or if a Boy Scout trip requires advance registration online using a credit card. We don’t like to do things that way, but sometimes we don’t have a choice.
Plus we KNOW what we have used it for, so we can easily check if someone else captures our number and uses it for nefarious purposes.
Otherwise, we pay as we go. No credit. No debt.
Peace
Jim Elliott <><
#15 “We are all in this and what to do about it is the question, not who did it.”
I am a boomer (alas) and I think that Gen X/Y/etc have a point. It is not just “who did it” but “who will pay for it”.
Me I think the folks who had the party should pay for the party. That would be us. The way the Boomers should pay for their party is by working into their seventies, not by expecting Gen X/Y/a to pay for our “entitlements”. In point of fact we were handed incredible wealth and resources, and we threw it all away, and then ran up our kids bills to try to keep it.
“Greed is Good” is Gordon Gekko’s line from the movie “Wall Street.” And something those who are debt laden should watch or rewatch….
[blockquote]For the first time, the middle class can realize economic gain by sitting at a desk typing on a computer. The end of the week brings a paycheck, but nothing one can take a child to, point to and say “See? Daddy helped build thatâ€.[/blockquote]
Not necessarily. [url=http://www.bluffton.edu/~bergerd/Models/]Daddy built this.[/url]
[url=http://www.bluffton.edu/~bergerd/JmolFolder/DNA.html]And this[/url] and a number of other, less flashy things.