The Fall of The Idea of Thrift
Longman, Phillip
The Fall of The Idea of Thrift How the economists came to label virtue a vice by Phillip Longman During the early months of 1958, as the unemployment rate approached a new postwar high of 6.8...
...The unfortunate implication—that thrift itself was obsolete, if not socially deviant—was extremely popular, and not only with liberal intellectuals...
...The actual constituency for thrift in government receded at that moment into a permanent minority...
...Can an ethos of capital stewardship, of principled regard for the financial and economic interests of future generations, be reconciled with the prevailing values and attitudes of modern day liberalism...
...Consider, for example, that despite the enormous federal deficits incurred under Reagan, the amount owed by individual debtors (approximately $1.7 trillion) is still, as of this writing, greater than the national debt...
...Universal thrift, he argued, would "not only destroy the budding idea of the proletariat, but also provide ever-increasing facilities for higher production at higher wages . . . . [It] transforms the man from a mere industrial parasite into a sturdy member of society...
...One lesson we can take from their experience is to appreciate more fully the fragile relationship between our cultural values and the way we manage or manipulate the economy...
...Government policy since the end of the war had promoted a fantastic expansion of consumer installment buying, and had punished savers through a variety of tax measures and banking regulations that diverted credit away from productive uses...
...It is useful to recall that an important precedent for a thrift ethic does exist within the liberal tradition itself...
...The Wagner Act, Social Security, the G.I...
...Yet for liberals, especially, the question of how best to oppose this spend-thrift policy poses tremendous difficulties...
...in fact, as we now discover, it was their fathers who were dropping out, in droves ." Thrift and civilization The constellation of self-denying values that made possible our nation's productive achievements and material well-being— preeminently the willingness to defer some present consumption in order to realize greater future happiness—required hundreds of centuries to evolve in the West...
...Another bank in St...
...I he thrift ethos hasn't always been the province of Wall Street Republicans...
...Members of the middle class, in particular, need to return to a stance of selfreliance— saving during their middle years to meet the real cost of their retirement, rather than depending so much on the next generation to subsidize their "golden years...
...Today, the everincreasing sense of entitlement present even in our middle class has become wholly out of joint with the actual productive potential of our economy...
...What seemed like a big debt in 1790 would be nothing today...
...Stuart Chase was quick to catch the new paradigm...
...Such changes, however, IneiVINVEY will not come easily...
...Success seemed to come with no price in self-denial...
...But now our plant is substantially built...
...Indeed, the war experience itself seemed to vindicate their idea that the nation could borrow and spend its way to prosperity...
...The following year Lord Keynes published his monumental General Theory of Employment, Money and Interest...
...policy to encourage many other nations to submit their citizens to a strict regime of thrift...
...mortgage guarantee programs and other federal measures had made a middle-class income and lifestyle possible for millions who otherwise would have remained on the farm or in the old neighborhood...
...is now rapidly reverting to its nineteenth-century status as a net debtor nation, no one here is proposing that we once again celebrate individual thrift as a social virtue...
...Far from routing Keynes from the temple, Reagan has made him the foundation...
...The New Deal, as is often noted, began in a spirit of pragmatic experimentation...
...In the minds of many Americans, the low growth, rampant inflation, and shortages of the 1970s eventually came to be a kind of symbolic punishment for the nation's excesses during the previous decade...
...For Nathan, as for many liberals of the era, the solution, in part, was to expand "social security," as the term was then used in its broadest sense...
...The downturn, they believed, had been caused by an excess of savings, particularly on the part of the rich...
...The percentage of men retiring before 65 has more than doubled since the mid-1950s, despite dramatic gains in life expectancy...
...Advertisers across the country immediately seized upon this happy new presidential theme, launching hundreds of "confidence" or "prosperity" drives to reinforce Ike's message to the consumer...
...While this formulation was widely and vigorously condemned as heresy at the time, it soon enough becamea point of liberal orthodoxy, the first premise of the New Deal economics and of the post-war consumer society...
...In many respects, its values and themes presaged those of the environmental movement of our own time, but with a significant difference...
...Illustration by Byron Peck...
...So long as the mass of Americans remained financially unprotected against the hazards of unemployment, illness, and forced retirement, they would continue to put away money for a rainy day...
...It is the savings of the individual which compose the wealth—in other words, the well-being of every nation," Smiles asserted in a relentless volume entitled simply, Thrift...
...This was particularly so among liberal intellectuals...
...One person's "savings" are of little net social benefit if they merely feed someone else's gold speculation or consumer debt...
...Were liberals of the 1930s justified in their mounting opposition to thrift...
...Lyndon Johnson's decision, in 1966, to meet the mounting cost of the Vietnam war through borrowing rather than by increased taxation sealed the pattern...
...But after the shock in 1929, most liberals swiftly repudiated theideal of thrift in economics...
...By this late date we must frankly admit that as a nation we cannot continue to subsidize so much present consumption by drawing upon the future...
...While peculiar economic conditions may have allowed the last generation to succeed for a while without regard for thrift, younger Americans will not get away with repeating their example...
...In 1950 more than half the men over 65 were still in the work force, while today that number has dwindled to one-fifth...
...But among the present older generation, this ethos has almost completely disappeared...
...Despite some continuing use of the language of the Protestant ethic, the fact was that by the 1950s American culture had become primarily hedonistic, concerned with play, fun, display, and pleasure—and, typical of things in America, in a compulsive way...
...and F.H.A...
...But throughout his career, he tended to deemphasize this side of his theory, as did virtually all of his later disciples...
...At what moment in our economic history do we propose to cash in and enjoy the triumph of our thrift...
...But in retrospect, these new currents were more ambiguous than they at first seemed...
...such values are still largely absent from the "developing" world, and this, surely, has something to do with its poverty...
...But surely, many of the predominating values of that decade were inspired, or at least informed, by the vague notion that government could secure lasting affluence for all, without any immediate sacrifice of private consumption...
...For the first time in American history, the majority of families would soon own, or at least hold a mortgage on, their own homes...
...In America, the most influential members of the present older generation erred by taking the "Victorianism" of their elders too much for granted...
...While much of this new thrift was attributed at the time to the aggressive marketing campaigns waged by the nation's banks and insurance companies, as well as to the general rise of wages over inflation, it was also commonly accepted that the new impulse to savewas inspired in large part by a genuine social ethos of self-help, conservation, and stewardship...
...We must once again submit to a regime of thrift, or else find more and more of our options as a society constrained by debt service and slow growth...
...What our children will come to regard as a big debt, our greatgrandchildren may consider relatively unimportant ." Finally, after World War II, there was the obvious observation that America had become the most powerful nation on earth...
...It is not necessary, nor even desirable, that we become a nation of stern Victorians...
...Yet intellectuals of the last generation dismissed its utility, railed against its spiritual oppressiveness, and then were soon enough astonished by its almost complete collapse during the 1960s—before many had even realized their own middle age...
...When it comes to others, we readily acknowledge that no nation can continually borrow in order to finance personal consumption...
...A penny spent In the 1870's a most eminent Victorian and popular moralist, Samuel Smiles, became famous for his lively defense of the opposing notion, then the orthodoxy of the striving middle classes in both Europe and America...
...These trends argue for a fundamental change in our thinking about the respective roles of individual savings and consumption in our society...
...Bill, V.A...
...Ike's faith in the power of positive selling was evidence of a powerful, new, bi-partisan consensus in American economic thought: that, for better or for worse, the nation's future prosperity no longer depended much on individual savings, hard work, or initiative but more on the present population's propensity to consume...
...No single idea can possibly explain, of course, the unprecedented revolution of American culture during the 1960s...
...but it also marked a dramatic transformation in our political culture: never again would we find the will as a nation to avoid deficit financing of our annual wants, whether in periods of growth or recession...
...by purchasing on the installment plan, even families with a modest income could soon afford a new car, a television, a dishwasher, garbage disposal, and other household conveniences never dreamed of by the previous generation...
...But such policies did not foster—rather, they tended to erode—those familiar bourgeois values of thrift, initiative and self-reliance that are so essential to the workings of capitalism...
...The Thrift Movement was an odd fusion of many diverse interests and constituencies...
...The American Dream of the postwar era was not over, he seemed to be saying...
...one could still have one's cake and eat it too...
...expanded relief, encouragement for organized labor, and other policies that secured the common man against want...
...This raises a hard question...
...People find it hard to believe that if they spend more they will have more," Nathan commented...
...We must not forget that the real national product of the United States is an ever-growing thing...
...as its members grew older, they would create an ever-expanding market, which, in turn, would automatically call forth new capital investment, as new profit opportunities became available...
...Although Reagan never used the word, he excoriated Carter again and again for his counsel of thrift, such as his moralizing pleas that Americans reduce their energy consumption in the national interest...
...and we need tax and banking policies that reflect this necessity...
...In the end, the hopes for an American Century proved exaggerated, of course...
...We the everyday men and women are the backbone of this country," MacGregor wrote...
...so was Stuart Chase, the well-known author and perennial weathervane of fashionable liberal opinion, who in 1928 wrote a popular book called Waste...
...Between 1969 and 1979, nonmeans-tested federal spending for the elderly nearly quadrupled, from $38.8 billion to $148.5 billion...
...So it is that every thrifty person may be regarded as a public benefactor, and every thriftless person as a public enemy...
...It was closely associated with effectiveness, loyalty, patriotism, victory...
...The more immediate problem was over-production, which could be cured only by increased consumption...
...Why is it that today, such adulation of individual thrift is virtually absent from our economic debate...
...The Fall of The Idea of Thrift How the economists came to label virtue a vice by Phillip Longman During the early months of 1958, as the unemployment rate approached a new postwar high of 6.8 percent and business profits slumped, the Eisenhower administration found itself besieged from all quarters with demands that it take drastic action to avert the coming depression...
...Accordingly, many economists were convinced that the baby boom alone would provide longlasting prosperity...
...endless jiggers and doodads and contrivances...
...The partisans of Thrift abhorred waste and applauded conservation, but unlike today's conservationists, extended their values to the arena of finance...
...Many realized for the first time that it was a matter of life and death to thousands of soldiers and of civilians also, whether they wasted or whether they conserved food and fuel," Blakey wrote...
...An association of Cleveland auto dealers invented the slogan "YOUAUTOBUY"— later adopted by the whole industry—and was quickly rewarded with invitations to the White House and a favorable mention at Ike's weekly news conference...
...By 1982 a typical Medicare recipient was entitled to benefits worth an estimated 22 times the amount he or she had previously contributed to the system in payroll taxes...
...As bemusedly reported by The Nation, the Bureau was "getting up at four o'clock these cold winter mornings to plaster our shop windows with posters of a figure of Uncle Sam sitting at the throttle of a locomotive...
...Louis had a similar message for would-be savers: "In times such as these, excessive savings can be as harmful as excessive spending" Auto dealers in Essex County, New Jersey, according to the Journal, mounted a joint radio campaign to warn the public: "Buy Now...
...Coincidental with this increased spending for the elderly was a transformation in the prevailing attitude toward retirement itself...
...For what are we accumulating...
...As Robert Lekachman would write in the sixties, one of Keynes's significant "successes" was "the weakening of the identification between virtue and thrift...
...But for a long time, the country could reasonably expect to dominate its trading partners without any special effort...
...Francis...
...Finally, the increasing fascination with hightechnology works against the old paradigm of a fully matured economy of abundance requiring little capital investment...
...The sheer size of this generation seemed to guarantee that the economy would continue to grow, with only a minimum of investment...
...Phillip Longman is a Princeton, New Jersey, writer...
...Remember, though, that what we now call Keynesianism was flourishing before Keynes's book...
...Ah gwan," the Bank of Saint Louis urged in a Sunday newspaper ad, "buy that new car...
...The needs for which people used to save— retirement or unemployment, a child's education, buying a house—were now met increasingly by the subsidies and tax benefits of the welfare state...
...Yet even as the U.S...
...Yet our present debt crisis is also bound up with what John Maynard Keynes liked to call "the habits of the community"—specifically, in the general demise of the thrift ethos over the last generation...
...In the 1964 edition of his text, Samuelson instructed, "What once was a social virtue [i.e., savings] may [in times of depression] become a social vice...
...We celebrate 'Buyers Week' and 'Thrift Week' at one and the same time...
...Keynes to the kingdom During the Depression years, the Thrift Movement's emphasis on conservation of natural resources remained an important influence on mainstream liberalism...
...While tenured educators, social critics and presidential advisors spoke incessantly of "the challenge of abundance" and "the miseries of affluence," fiscal policy followed Keynesian prescriptions for reversing depressions, although no depression existed...
...By the end of the first term, the idea that had come to prevail was prosperity through mass consumption, promoted via large deficits...
...We all, I'm sure, feel the tension between the roles of producer and consumer...
...While there was much anxiety about the communists, few people seriously doubted that the country would succeed in at least containing the threat...
...In the first half of 1984, mortgage and consumer borrowing together absorbed more than 38 percent of all funds raised in the U.S...
...Even in wartime, Americans learned, there was no longer any need for thrift on the home front, no reason to save up victory bonds, endure rationing, or indeed to make any sort of economic sacrifice...
...The measure, now championed by the supply-ciders, stimulated the economy to dizzying new heights...
...Chase asked in a pamphlet entitled Out of the Depression...
...Instead of suggesting stinginess, it came to connote proper use...
...Let us do our share in making this country the great financial power of the world...
...But the war experience also brought forth other, countervailing factors...
...Population increase has slowed down but little, and for a long time our numbers will continue to grow...
...As it turned out, there was good reason to believe that the country was headed for a prolonged period of prosperity...
...There are, I think, reasons for cautious optimism in this regard...
...But the remedy adopted—the systematic promotion of mass consumptionled to an erosion of the traditional American values of work, thrift, and self-reliance...
...World War II, of course, brought forth a plethora of new technologies—plastics, jet propulsion, nuclear power—all of which, to be fully pursued, required enormous capital investment...
...See "What the Democrats Could Learn from Jack Kemp," page 28...
...But "if a man has a modest assured income, he may be inclined to spend some of these accumulated savings, as the economists hope he will spend them ." In other words, the guiding purpose behind the liberal welfare state was not just to protect the unfortunate against life's exigencies, it was also to depress the savings rate and thereby secure prosperity for all...
...Nobody is going to spend these accumulated savings if he does not know where next week's income is coming from," argued a social security expert named Eveline Burns...
...By investing our savings, instead of spending them, we deny ourselves today in order to produce more in the future, although we are already equipped to produce more than we know how to use...
...Clear the track for prosperity...
...The problem was not so much the New Deal prescription itself as it was the way this particular response to particular economic circumstances took root as a permanent cultural attitude...
...Anyone who has endured freshman economics during the last 30 or so years has probably encountered it in Paul A. Samuelson's all-time best-selling college textbook, Economics—the "paradox of thrift...
...Given the threat the cause posed to the immediate interests of mass merchandisers, it is not surprising that the initial assaults came from capitalist quarters—principally from retailers, who found it increasingly difficult to unload their more impractical wares...
...It became a part of the folk wisdom of the era...
...Today there can be no doubt that Reagan is the true legatee of the ethos of free spending, high consumption, and growth by deficit...
...The baby boom, for example...
...Cleveland city fathers elected a "Miss Prosperity" to reign over antirecession parades and street rallies...
...What is true for the individual—that extra thriftiness means increased savings and wealth—may then become completely untrue for the community as a whole...
...Conversely, it occurred to many economists (Samuelson prominent among them) that because of the baby boom, the burden of the compounding national debt, as well as the eventual cost .of Social Security and other old age benefits for their own generation, would be spread across a greatly expanded younger population...
...But we need to weigh our present appetites in the balance against our financial responsibility to future generations, as well as to our future selves...
...the authors complained...
...But most of the increased spending was consumed by members of the middle class...
...the per capita savings rate nearly doubled, from $89 to $186...
...In 1920, the editors of The Annals of the American Academy of Political and Social Science devoted a special issue to the Thrift Movement...
...Keynes, of course, conceived the need for such measures as temporary—at least in his more sober moods...
...This means not only that Americans must save more, but that we must use the resulting pool of capital for productive purposes rather than for financing credit card purchases, real estate deals, corporate takeovers or the mounting cost of entitlement programs...
...Every person accepting this monthly pension," Townsend's proposal stipulated, "shall agree under oath to spend it within the boundaries of the U.S...
...While this judgment was a hard point with liberals of the day, it did not upset their arguments against personal and national thrift...
...Returning servicemen faced an acute housing crisis and a tight job market...
...The culture was no longer concerned with how to work and achieve, but with how to spend and enjoy...
...In April The Wall Street Journal reported that "a massive antirecession psychological offensive...
...For students of the postwar era, one of the most perplexing riddles is how a generation of leading economists and opinion-makers who had witnessed the surprise and trauma of the great Depression suddenly could become so convinced that the country had entered a new unbounded age of almost automatic affluence...
...After the war it looks as though it [will] be superbuilt . . . . Large sections of our magnificent new plant will just have to stand and rot, unless we develop methods to get its fabulous output into the hands of the people, unless we have mass consumption ." Whereas the home-front experience of World War I had inspired a widespread abhorrence of waste, and an impulse to thrift in peacetime, the country's leading liberal opinion-makers drew an opposite lesson from World War II: the problem of production had been solved, and the nation's primary postwar challenge was to consume...
...Let us save...
...Again, the values of stewardship and husbandry embodied in the environmental movement may be part of a quickening sense of responsibility to future generations that can be made to apply in matters of public and personal finance as well...
...The American quarter-century The early postwar years are well-remembered as an era of national preoccupation with foreign intrigues: the Nuremberg trials, the recriminations over Yalta and the U.N., the Berlin blockade, the loss of China, and the mounting hysteria over communist infiltration of the State Department and other institutions of government...
...Gauging the book's actual influence on the course of American politics during the 1930s remains tricky, for it was not widely read in this country at the time, even by professional economists...
...senator from Michigan, articulated the lesson most liberals were taking from that year's sudden recovery, as America armed and fed a warring world: "If government spending on arms can make the factories whir," Moody asked, "why cannot the factories and farms be made to whir by the spending of the people...
...In 1946, successive strikes against the auto companies, Big Steel, the coal industry, and the railways paralyzed the country, prolonging shortages of many consumer items for many months...
...Basically, he confirmed popular liberal opinion of the day: excess saving and investment were the major causes of the Depression, and government could provide a cure by incurring large deficits, sponsoring public works projects, and generally redistributing income away from the rich and into the pockets of those more likely to spend it...
...Within just a few short years, however, these worries not only eased, they gave way to unprecedented economic optimism...
...Building up our industrial plants over the past 200 years, it has been inevitable that the producer should have first consideration," Chase said in an address given that May...
...Between roughly the mid-1920s and mid-1960s there was, in a narrow, technical sense, good cause to believe that some sort of real imbalance existed between what we could produce on the one hand and consume on the other...
...Samuelson was right to teach America's college students that too much thrift could, paradoxically, be a social vice in economic hard times...
...Starting in early 1943, a myriad of public and private commissions as well as individuals began issuing manifestos along this line, including (inevitably) Stuart Chase...
...It was, in fact, the rarest and most fragile of all cultural forms, and the true source of our national might over the long haul...
...As Frances FitzGerald has noted: "In the 1960s and seventies, American parents worried about the kids of the Woodstock generation 'dropping out of the system...
...The reign of the stewards The Thrift Movement, as it was called, reached its apex in this country, as well as in England, during the early 1920s...
...As growth came to seem automatic, factional greed met with greater public tolerance, since no claim against the commonweal seemed to come at the expense of any other...
...standards of education and health care would improve dramatically...
...Under Reagan, Americans have become as dependent on the savings of foreigners to maintain their standard of living as we ever were dependent on foreign sources of energy...
...In his popular Book of Thrift, T. D. MacGregor cast the movement in terms of the class struggle...
...In 1944, Robert Nathan, an economist and rising star among the administration's braintrusters during the war, wrote in Mobilizing for Abundance that postwar prosperity would require fundamental changes, not only in the role of government, but also, and more profoundly, in the culture itself...
...During just the past four years, consumer installment buying has increased by almost 30 percent...
...For Smiles, as for most Americans of his era, individual thrift was not only a virtue in itself...
...Though Roosevelt campaigned in 1932 on the promise of a balanced budget, he was not really committed to any particular economic theory: his intention, as he said early on, was to try everything and see what worked...
...Academic economists, for example, celebrated Kennedy's enlightened understanding of "the thrift paradox" after he intentionally ran up the projected deficit in the 1964 budget...
...For boom periods, he prescribed that government raise taxes and cut expenditures in order to forestall inflation...
...In dispassionately analyzing the growth of the [national] debt, one error we must avoid," Samuelson- wrote in the 1955 edition of his textbook...
...In an introductory essay, economist Roy G. Blakey explained the philosophy of the cause and its origins in the homefront experience of the Great War...
...The debts of people, no less than those of the state, are depleting the supply, and running up the cost, of capital available for productive purposes...
...In pursuit of that end, government and business can easily wind up encouraging habits of high consumption and self-indulgence that are inimical to the requirements of production and, indeed, to the long-term interests of the society itself...
...During his first campaign and early years in office, Jimmy Carter played with sincerity and skill to this new spirit of repentance, through self-conscious displays of old-time religion, stern injunctions to thrift in the use of natural resources, and calls for economy in government...
...is just getting under way in nearly every major city in the U.S...
...Between 1912 and 1924, the amount of money deposited in savings banks increased more than two and a half times, according to a contemporary survey by the American Bankers Association...
...Having published only three years earlier a spirited book in defense of thrift, by 1931 he had almost completely reversed his position...
...For awhile, we could afford to become somewhat more self-indulgent as a people...
...The Job You Save May Be Your Own ?' Elsewhere in New Jersey, a tire store used the slogan "Buy, Buy, Buy," adding, "It's your patriotic duty...
...Buy what you need now!' " The same sentiment emerged in an article in the The Atlantic Monthly that same year...
...As Daniel Bell has written, "By the 1950s, the pattern of achievement remained, but it had been redefined to emphasize status and taste...
...Or must such questions always be the province of economic royalists Wall Street Republicans and other rentiers...
...In other words," the senator continued, "if we turn our productive power loose when the war is over, and call overproduction by its real name, under-consumption, why would not that provide the answer for which we are all looking...
...During the twenties the liberal Thrift Movement promoted values and themes that presaged the environmental movement of today...
...Even the banks joined in the siren call, abandoning their usual admonishments to thrift...
...In the absence of dramatic new inventions, it occurred to people such as Alvin Hansen that capital formation was no longer the pressing concern it once had been...
...In promoting the consumption we need to stimulate the economy, government and business in the postwar era unfortunately have encouraged habits of high consumption and self-indulgence that are harmful to long-term prosperity...
...we insist, in effect, that the citizens of these debtor countries adhere to an ethos of thrift, as our Victorian forebears once did, to furnish capital necessary for economic growth...
...There was the Civilian Conservation Corps...
...Ike listened to the prophets of crisis, and chose his course: he twice went before the public to admonish that it was Americans' patriotic duty to save less and to Buy Now...
...Entitled "The Dilemma of Thrift," and written by William T. Foster, a former president of Reed College, and a businessman named Waddill Catchings, the article bestowed new intellectual respectability upon the idea that extravagant spending was now the nation's best guarantee of prosperity...
...The prediction turned out to be accurate for as long as most members of the baby boom were too young to join the labor force...
...Businessmen in Boston offered "POPS," for "Power of Positive Selling...
...On the other hand, it is the wastefulness of individuals which occasions the impoverishment of states...
...In 1926, a business group calling itself the National Prosperity Bureau sprang into existence to promote easy spending and thereby counter this threat...
...By cutting taxes instead, Reagan promised, he would stimulate new investment and higher consumption, close the budget deficit, and still have money left over for an arms buildup...
...That even middle-class citizens now typically neglect to save enough to pay their own way through retirement or to be secure against even a small reversal of fortune causes a clamor for "entitlements," which of course prompts in turn still more public borrowing...
...During the election of 1980, for example, Carter found himself attacked simultaneously as a spendthrift liberal and as a true believer in an anti-American "era of limits ." Reagan, while railing against the profligacy of liberalism, promised to reindustrialize and remilitarize the country with no attendent sacrifice of private consumption...
...Out of such raw material was woven that great, wooly, socio-economic paradigm of the 1950s: the idea of the Mass Consumption Society...
...Despite their new "supplyside" rhetoric, conservatives have, by and large, renounced their traditional role as defenders of the thrift ethos, celebrating instead the idea that the nation can borrow and spend its way to lasting prosperity...
...While the skyrocketing cost of these programs partly resulted from the expanding number of citizens of retirement age, large increases in individual benefit levels also played an enormous role...
...On the other hand, the system sometimes requires—particularly during periods of recession, when profitable investment opportunities decline—that we consume more and more of the surplus that results from our labor and savings, for otherwise there will be no market for new enterprise...
...We are deluged with things," Chase complained, "which we do not wear, which we lose, which go out of style, which disappear anyhow...
...Accordingly, the nation's existing industrial base and technological superiority seemed secure, at least until the rest of the world recovered from near total economic ruin...
...By the early fifties, the Keynesian notion that consumer demand determined investment was firmly in place and seemed validated by recent experience...
...His movement nearly succeeded but was preempted by the passage of the Social Security Act in 1935...
...Oddly, it is still official U.S...
...As late as the 1950s, most older Americans, when polled, regarded retirement as an institution solely for the handicapped or infirm, and accordingly hoped to work for as long as they were physically able...
...At their root is liberalism's longstanding ambivalence about the purposes of thrift...
...Andrew Mellon was an outspoken apostle of the cause...
...During the latter part of the seventies, the rise of the New Right and Ronald Reagan also seemed at first to be animated by the same vague national yearning for a return to traditional values...
...By the mid-1960s, there remained little in the nation's mainstream culture that could serve as a check against hedonism and self-indulgence...
...Instead the war brought compounding affluence to those lucky enough to stay home...
...Let us economize...
...Up until roughly the time of the Vietnam war there were persuasive reasons to believe that, as Chase had hinted, the time had come to "cash in on the triumph of our thrift ." First, to many observers, the era between the two wars seemed to be marked by a slow pace of technological development between the two wars...
...Instead, we debate the size of the federal deficit, the money supply, the value of the dollar, tax rates and other technical, microeconomic factors...
...The recent rehabilitation of the entrepreneur is a hopeful sign, while the baby boom's oft-noted demand for high-quality, "useful" products—a phenomenon that has become the bane of many mass marketeers—may betoken a certain generational rejection of the mass-consumption ethos...
...In a 1941 book entitled Boom or Bust?, Blair Moody, a progressive U.S...
...We tend to forget the anxiety most Americans also felt concerning the economy...
...During that same period, the percentage of all federal spending committed to the elderly increased by almost a third, so that by 1979 the 11 percent of the population that was over 65 claimed more than 30 percent of the entire federal budget...
...This free spending by the old, he promised, would bring swift prosperity for all generations...
...The expectation of such a bonus— of senior citizens' benefits far in excess of one's contributions during one's working years—was a departure from the traditional idea that ordinary, middle-class Americans should strive to pay their own way through life...
...Professional social workers of the era, as well as many partisans of the labor movement, also promoted the ideal of thrift or its variant, "wise spending," convinced that it was the surest way for members of the working class to help themselves...
...So there did not seem to be much need to promote increased individual saving for retirement nor to feel inhibited, in the arena of public finance about borrowing against future production to fund the welfare state...
...Our millions of workers can do this, not the capitalists...
...In the end, the proper rate of savings is determined not by utility functions nor by statistical comparisons with the past, but by the real cost of our ambitions for the future...
...industry was overbuilt, and the only hope for prosperity was to promote the common man's ability, and proclivity, to buy...
...Here, it seems, the advertiser plays on the essential monkey within us—grabbing for a rose only to pick it to pieces, petal by petal...
...Since the pace of technology had slackened, existing plants and equipment would become obsolete more slowly...
...In light of the national experience since 1929, many doubted that the country could avoid depression for long without the stimulus of another major war...
...within 30 days...
...The answer is probably yes, for that point in history...
...The telephone, the electric light, the airplane, the automobile, the radio—all were invented before the Great War...
...Surrounding him is the inscription: 'Full speed ahead...
...credit markets...
...Capitalism requires, on the one hand, that the mass of citizens be thrifty, hard-working, and willing to defer immediate gratification in order to build up and finance new production...
...In the cases of Brazil and Mexico, for example, we have been quick to call for "austerity plans" as a condition for further credit...
...Townsend, promoting his scheme to give every citizen over age 65 a guaranteed monthly check of $2.00 (financed by a 2 percent national sales tax), was quick to reassure younger citizens that his plan would benefit them as well...
...Inflation punished everyone...
...His promise of easy affluence is so essentially liberal—as the term has come to be understood since the New Deal—that no matter how extreme and profligate his policies, no present-day liberal can persuasively oppose them—a Democrat of Mondale's age and experience least of all...
...What a mess we get into...
...A permanent deficit How, then, did liberals of the last generation go wrong in disparaging thrift...
...Capitalist counterpunch Why did the Thrift Movement fade...
...Mobilizing for abundance In the popular estimation of the time, it was the mobilization for World War II that ended the Depression, not the New Deal...
...The most important case in point, as far as public finance was concerned, was that of senior citizens, who, beginning in the late sixties, became increasingly militant and effective in their demands for subsidy as a generation...
...But there is no doubt that Keynes's elegant algebraic demonstrations of the potential imbalance between savings and consumption under laissez-faire capitalism, combined with his fine writing, exalted social standing, and sterling academic credentials, all made a profound impression on certain influential American academics and intellectuals...
...The consumer clearly was the hero under this analysis, while the saver enriched himself at the expense of the common good...
...Increasingly this came to be seen as a positive time of life—a just reward of leisure, travel, and creative consumption...
...its widespread practice was considered a first requisite of civilization and nation-building...
...Samuel Crowther, in his 1920 book, Why Men Strike, connected the thriftiness of the working class to broader social concerns...
...It was an ethos directly inspired by the conduct of the Great War...
...The largest cause of this jump was increased Social Security and Medicare spending...
...for example, and numerous New Deal bureaucracies dedicated to the problems of soil erosion and forest management...
...Already in existence are 'Operation Optimism,' 'Keep Detroit Dynamic,' 'Crusade for Confidence,' 'Buy and Be Happy,' and 'O.K...
Vol. 16 • January 1985 • No. 12
