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ShareDavid Brooks has written a fair share of conservative party-line nonsense, so it pays to be skeptical even when on the surface he seems to be making sense, as in this recent column about the explosion of American household debt in recent decades. Brooks begins with a paean to American’s frugal Puritanical tradition and then laments at the “financial decadence” that has driven up credit-card debt to record levels.
Over the past 30 years…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.
That seems accurate enough: the greatly expanded reach of media and the advertising that media carries, as well as the infiltration of marketing into virtually every aspect of social being, has made spending seem like the mode of participation in our culture. Activities that have no commercial adjunct—things that require no branded products or have no associated stores connected with them or can’t be reduced to a collection of the appropriate goods—seem vaguely illegitimate. Among most ordinary citizens, political power has given way to purchasing power, which is meaningless when merely potential. We need to spend and collect stuff to make that power (the chief kind of power that is socially recognized) manifest.
Citing a recent think-tank report, “For a New Thrift: Confronting the Debt Culture” (unlinkable, alas, as Felix Salmon notes), Brooks explains that America has been divided into the “investor class”—people who save and are well-informed about money management and can hire advisors—and the “lottery class,” basically everyone else. These are the rubes, in Brooks estimation, who are vulnerable to predatory lenders and revolving debt and other tactics by which the ignorant poor are exploited.
Brooks blames “the loosening of financial inhibition” for this class’s indebtedness, which, as Richard Serlin explains in a comment at Mark Thoma’s blog, is somewhat dubious. Serlin cites Elizabeth Warren, who argued that debt is not driven by irresponsible splurging (which would encourage us to have no sympathy for them) but by increasing insecurity and the absence of a social safety net. Medical bills and housing-bubble-bloated mortgages, not flat-screen TVs explain much of the debt.
That’s not to say that Brooks doesn’t have a point about the manifold forces aligned to discourage saving.
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?
But I’m not sure fixing the anemic savings rate is a matter of “raising public consciousness” about debt to generate a scold campaign against falling for predatory tactics. How about we dispense with that and head straight for some state laws prohibiting it, with a reinstitution of some aspects of the safety net that leads to the borrowing?
And it’s not very helpful to reduce the issue to this: “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.” If people can’t imagine the future consequences, it’s often because poverty has reduced their horizons to surviving in the here and now. They don’t have the luxury of subscribing to bourgeois values of saving and voluntary thrift. And how would one shift values anyway? They are deeply embedded in our culture’s discourse about itself. What to do? Get the business press to stop obsessing over consumer confidence and retail spending figures? Public service announcements about the importance of retirement savings (which could double as a trojan horse tactic for preparing the way for ending Social Security)? Remedial reading courses in Max Weber? Ban advertising that makes spending money on goods seem fun and advantageous? Raise interest rates back to 1981 levels?
You can’t have it both ways. You can’t cheerlead for the benefits of ownership, as a means for supplying a stake in society, and for purchasing power as a kind of empowering democratization of society’s benefits, and then also argue for the “bourgeois virtue” of frugality and saving, of waiting until the time is appropriate for consumerism. Brooks, who seems to be coarsening Daniel Bell’s Cultural Contradictions of Capitalism, expects us to believe that we can systematically drill into people’s heads that we live in an ownership society and then tell them they should not do whatever it takes to own things so that they can belong. Thus the ownership society is revealed to be yet another disguise for oligarchy, conserving power in the hands in that investor class and closing its ranks to aspirants. Is it Brooks’s hope that being a second-class citizen in the lottery class should be a spur for them to try harder to save enough to buy a stake on terms endorsed by the already entitled? What’s to keep the overclass from then changing the rules to keep others excluded?
The implicit promise of the consumer society is that money, no matter what its source (inheritance, cheap credit, payday loan kiosk) can be a social leveller via its ability to buy the goods the connote inclusion in the mainstream. We could all belong to the same middle class shopping at the same big-box stores and enjoying the same branded products. Maybe Brooks, like Bell, has a problem with the consumer society as a whole—the sociological positions he hints at in his 2004 book On Paradise Drive occasionally suggest as much. But in that book he is just as eager to celebrate consumption as a mark of prosperity.
Bell, who was railing primarily against 1960s hippies (“the youthful japes of Greenwich Village bohemia”) rather than spendthrift subprimers, solved this particular contradiction of capitalism by urging a return to religious values. So does Brooks, in his own way: “Foundations and churches could issue short-term loans to cut into the payday lenders’ business,” he advises. But it’s not hard to see where this leads—rely on private charity to make up for the social safety net’s failures and keep government out of the business of fixing that net. This column is basically compassionate conservatism cleverly disguised as more palatable complaints about greedy lenders and evil bankers.
