Tuesday, September 29, 2009

An Actually Interesting Values Debate
David Brooks thinks he's figured out how America has *really* lost its way: after 200 years of more or less solid adherence to Puritan thinking about money and wealth and risk, we all got unreflectively greedy.

...[D]espite the country’s notorious materialism, there has always been a countervailing stream of sound economic values. The early settlers believed in Calvinist restraint. The pioneers volunteered for brutal hardship during their treks out west. Waves of immigrant parents worked hard and practiced self-denial so their children could succeed. Government was limited and did not protect people from the consequences of their actions, thus enforcing discipline and restraint.
Over the past few years, however, there clearly has been an erosion in the country’s financial values. [...]

Evidence of this shift in values is all around. Some of the signs are seemingly innocuous. States around the country began sponsoring lotteries: government-approved gambling that extracts its largest toll from the poor. Executives and hedge fund managers began bragging about compensation packages that would have been considered shameful a few decades before. Chain restaurants went into supersize mode, offering gigantic portions that would have been considered socially unacceptable to an earlier generation.

Other signs are bigger. As William Galston of the Brookings Institution has noted, in the three decades between 1950 and 1980, personal consumption was remarkably stable, amounting to about 62 percent of G.D.P. In the next three decades, it shot upward, reaching 70 percent of G.D.P. in 2008.

During this period, debt exploded. In 1960, Americans’ personal debt amounted to about 55 percent of national income. By 2007, Americans’ personal debt had surged to 133 percent of national income.
If there is to be a movement to restore economic values, it will have to cut across the current taxonomies. Its goal will be to make the U.S. again a producer economy, not a consumer economy. It will champion a return to financial self-restraint, large and small.

It will have to take on what you might call the lobbyist ethos — the righteous conviction held by everybody from AARP to the agribusinesses that their groups are entitled to every possible appropriation, regardless of the larger public cost. It will have to take on the self-indulgent popular demand for low taxes and high spending.

Maybe the most striking thing about this to me is the seeming convergence between Brooks, an undeniably high-caste Beltway Insider with bona fides among both neoconservatives (he was a big-time Iraq War cheerleader who used to edit the Weekly Standard) and liberal internationalists (he conspicuously supported Obama last year and continues to have more good than bad things to say about the president and his administration) and James Howard Kunstler, who pretty much despises everything Brooks supports. Kunstler, whom I probably enjoy more than admire, has made a half-career on the idea that our blind consumption habits, facilitated by cheap and easy fossil fuels and exacerbated by irrational physical development patterns and a bloated credit economy, are going to destroy us as a society... and soon. Brooks, after many years of celebrating the sort of Americans that Kunstler detests ("Patio Man") and sneering at his fellow elites--you and me, basically--who disdain them, suddenly seems to agree.

But is his concern appropriate? And is he blaming the right people? Salon.com's Andrew Leonard says, Hell no:

My my my. I've seen some high horses in my day, but David Brooks is perched on a saddle so far aloft in the clouds of self-delusion that he can't even see the earth, much less reality. Let's examine his thesis more closely.

Americans ran up a lot of debt in the last few decades. There's no question about that. But one of the most striking developments of the last year has been how Americans have responded to the financial crisis at an individual level. We made a collective decision to start saving and stop spending. Is this because we woke up one morning last fall and suddenly became born-again Calvinists? No, it seems clear that we were responding rationally to economic incentives. The economy crashed, unemployment surged, home prices plummeted, and presto: We all started pinching pennies. Morality, insofar as expressed via our spending habits, is merely a reflection of the economy.
But a far more pertinent point of reference comes much earlier. Has Brooks somehow forgotten that just nine years ago the U.S. operated under a balanced budget and enjoyed a budget surplus? The explosion of public debt since that point has very little to do with the moral failings of Americans, and everything to do with objective fact. George W. Bush cut taxes, but did not match those cuts with spending cuts. Instead, he ramped up spending dramatically, on two wars, healthcare, and finally, a huge bailout of Wall Street.

Bruce Bartlett has calculated that even without Obama stimulus-related spending increases, the current deficit for fiscal year 2009 would be about $1.3 trillion instead of $1.6 trillion. If you are a believer in Keynesian economics, you can make a pretty good case that Obama's additional spending is designed to get the economy growing again, so as to avoid even worse deficits in the future. Do nothing, and a shrinking economy means lower tax revenues and higher social spending. Morality has very little to do it -- the appropriate, responsible fiscal choice at this point is for government to spend, while the people save.

I have a lot more sympathy for the second point than the first. Yes, people respond to strong incentives--but you learn more by comparing behavior under similar circumstances than different ones. We had prosperity in the '50s and '60s too, and personal consumption wasn't anything like what it was in the '90s or '00s. Even in the supposedly self-indulgent '70s, by which time the Depression generation (with its obvious and experientially derived inclination toward thrift) was giving ground to the Blanks and Boomers, we weren't anything like what we were three years ago. Sometime around when Reagan came in, we began to get it in our heads that we deserved everything, right now, without ever have to sacrifice or even work particularly hard for it. Maybe a reason people seem so into the show "Mad Men" (other than its quality, which, not having seen more than a minute or two, I can't opine on) is that they grasp on some level how profoundly the rise and maturation of advertising as an industry--the science of wanting--has changed us as a culture.

Onto Leonard's second point. If you're grading the Clinton and Bush43 administrations on fiscal responsibility, it's obvious who passes and who fails (even if you put it on a curve for the fact that the same Republican Congress that stalemated Clinton utterly enabled Bush's recklessness; one-party control of government is a virtual guarantee that government will play Santa Claus through spending and/or tax cuts, because there's only one place the credit can go). I think it's more likely than not that Brooks would acknowledge as much.

But there's another dimension in which I think Bush might be culpable, and whatever Brooks's intent, it actually kind of validates his "cultural decline" hypothesis (and reinforces my "Mad Men" notion): under Bush, to an extent we'd never seen before, we began to define ourselves as consumers. When we were attacked on 9/11, we were told to go shopping. The American way of life was said to be non-negotiable; there would be no mass sacrifice for the war effort, not even higher taxes to pay for the costs of defense (or empire, depending on your perspective). For our grandparents, who subjugated pretty much everything to the war effort sixty-five years ago, this would have been unimaginable--and at some level, it has to send a profound message.

Brooks comes up short on specifics for how to fight this new culture war. I think it has to start with political leadership, and I'm not sure it's as far-fetched that a figure of national stature could articulate the point as it probably seems today. (Kunstler thought that Obama might do it as of last winter/spring, though he seems to have reached the view that ultimately, this president is just another pol.) But both Obama and John McCain made more or less explicit appeals for greater citizen engagement, which would seem to be a prerequisite to a call for sacrifice. A lot of Democrats seem fairly comfortable with asking the public to take some (small) steps in combatting the effects of climate change; others want a straight carbon tax. The Republicans, still in thrall to the Bush legacy whether they realize it or not, aren't yet ready to ask any sacrifice of the American people--but they do want to shrink government. Eventually, one of the cleverer Republicans will make the mental leap that extending this idea beyond the halls of power might be politically resonant.

Otherwise, it's possible that this will be imposed on the political class from the outside, through a Perot-like third party movement. This is probably more what Brooks has in mind; if it does start to cohere, the concern will be to make sure that the demagogues and psychos on the right don't get ahold of it.


the Navigator said...

The Congressional GOP right now is at a point of refusing to countenance any potential support for limiting Medicare spending. Yes, it's just for cynical partisan purposes, and yes they'll drop it as soon as it's convenient, but it's still noteworthy that the party that's always hated Medicare is now scoring points by accusing Dems of euthanasia even for scaling back demonstrably wasteful Medicare Advantage funding. When it comes to asking the American people to sacrifice - yeah, we're gonna have to look elsewhere.

David said...

The Republicans won't take any cues from the Democrats, certainly. It might require a third party movement, whoever the modern heir to John Anderson is, to goose both parties toward a more responsible position.