Skip to main content

New York Times Editorial - The Great Seduction

Here is an important editorial in the New York Times called "The Great Seduction by David Brooks. You can read the original post here. 

Thanks to Dr. Amy Sherman from Ele:Vate for the head's up.
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.

The deterioration of financial mores has meant two things. First, it’s meant an explosion of debt that inhibits social mobility and ruins lives. Between 1989 and 2001, credit-card debt nearly tripled, soaring from $238 billion to $692 billion. By last year, it was up to $937 billion, the report said.

Second, the transformation has led to a stark financial polarization. On the one hand, there is what the report calls the investor class. It has tax-deferred savings plans, as well as an army of financial advisers. On the other hand, there is the lottery class, people with little access to 401(k)’s or financial planning but plenty of access to payday lenders, credit cards and lottery agents.

The loosening of financial inhibition has meant more options for the well-educated but more temptation and chaos for the most vulnerable. Social norms, the invisible threads that guide behavior, have deteriorated. Over the past years, Americans have been more socially conscious about protecting the environment and inhaling tobacco. They have become less socially conscious about money and debt.

The agents of destruction are many. State governments have played a role. They aggressively hawk their lottery products, which some people call a tax on stupidity. Twenty percent of Americans are frequent players, spending about $60 billion a year. The spending is starkly regressive. A household with income under $13,000 spends, on average, $645 a year on lottery tickets, about 9 percent of all income. Aside from the financial toll, the moral toll is comprehensive. Here is the government, the guardian of order, telling people that they don’t have to work to build for the future. They can strike it rich for nothing.

Payday lenders have also played a role. They seductively offer fast cash — at absurd interest rates — to 15 million people every month.

Credit card companies have played a role. Instead of targeting the financially astute, who pay off their debts, they’ve found that they can make money off the young and vulnerable. Fifty-six percent of students in their final year of college carry four or more credit cards.

Congress and the White House have played a role. The nation’s leaders have always had an incentive to shove costs for current promises onto the backs of future generations. It’s only now become respectable to do so.

Wall Street has played a role. Bill Gates built a socially useful product to make his fortune. But what message do the compensation packages that hedge fund managers get send across the country?

The list could go on. But the report, which is nicely summarized by Barbara Dafoe Whitehead in The American Interest (available free online), also has some recommendations. First, raise public consciousness about debt the way the anti-smoking activists did with their campaign. Second, create institutions that encourage thrift.

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.

There are dozens of things that could be done. But the most important is to shift values. Franklin made it prestigious to embrace certain bourgeois virtues. Now it’s socially acceptable to undermine those virtues. It’s considered normal to play the debt game and imagine that decisions made today will have no consequences for the future.




Comments

Popular posts from this blog

YWAMers Praised for Faith and Leadership

The Denver Post reports on the memorial service at the Denver YWAM base: "We're going to celebrate a life, we're not accentuating a death," said Faith Bible Chapel pastor George Morrison, in opening a memorial service today for two people killed at a missionary training school in Arvada . The service is called "A Celebration of Life for Tiffany and Philip." Philip Crouse and Tiffany Johnson died Sunday when a gunman opened fire at the school's dormitory. Youth With a Mission director Peter Warren said today both Crouse and Johnson embodied the spirit of the group. First the service focused on Crouse . "Phil gave his life to Jesus Christ and was never the same again," said Zach, a friend of Johnson's who met him years ago at a youth ministry in Alaska. At the time, Crouse was tough and wouldn't let people get close to him. "Over the years, Phil became a humble, teachable, sweet guy" who was able to reach kids with rough e

Non Profit Payday Loans?

Here's a recent New York Times article sent to me from Katie at NCHM on payday lending. I know that the NCUD / CTCU-EPA partnership is going to have to create the right program addressing the needs for short term lending for low income families. We don't have the answers yet, but it's definitely on our radar. APPLETON, Wis. — This city of 70,000 has five McDonald’s franchises, three Pizza Huts, four Starbucks shops — and 19 payday loan stores, brightly lighted storefronts with names like EZ Money and Check Into Cash that offer two-week loans without credit checks. Peggy Truckey, 53, knows the allure. Last year she owed nearly $1,300 to four of those stores, and was paying about $600 a month in finance fees alone. “I thought I was going to have to take a second job just to pay off the interest,” Ms. Truckey said. Then she heard about a new nonprofit program operated out of a Goodwill thrift store, one of several hundred lower-cost payday loan products that are now bein

Samuel Liotti TV Interview about Obama's Nomination

Check this out this link! Samuel, his best friend Malik and other students at East Palo Alto Academy were interviewed on TV  where they were asked about their views on Obama.  The students has some interesting and revealing comments. With all the politics, it may be easy for some to overlook the significance and importance of the first truly viable African-American candidate for president. Obama's nomination to especially many young people in our community speaks volumes about who they are and what they can become. This is an exciting and important time in our history.  Please join me in praying for both our candidates, but especially Obama. I've felt impressed that I should pray specifically for his safety during the next months.  Follow the link and check out the interview! What about you? How significant do you feel is Obama's nomination?