THE CULTURE OF DEBT IN AMERICA

As Edmund Morgan has argued, “Franklin was raised in Boston at a time when moral perfection meant absolute obedience in mind and deed to all of God’s commands.”  Only Jesus had ever attained such perfection but Franklin believed that Americans must work toward these virtues to achieve the “good life.”  He also believed that one could achieve these moral perfections through discipline and self control, which then brought rewards in this world, not the next.  Franklin epitomized the America of the 18th century and into the 19th.  Although Franklin was not a Christian as we would define it, he epitomized the contrast between the civilization being built in America and the one in aristocratic Europe.  Today, many of these virtues are mocked in America.  Yet, when one studies them, they match rather nicely with the virtues associated with biblical Christianity.

In this Perspective, I want to focus on the virtues of frugality and moderation.  David Brooks comments that “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.”  But over the last few decades that has changed—and radically.  He writes that 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. . . But the most rampant decadence today is financial decadence, the trampling of decent norms about how to use and harness money.”  For that reason, 62 scholars have signed on to a report by the Institute for American Values called “For a New Thrift:  Confronting the Debt Culture.” 

According to this report, two major developments have resulted from this deterioration of financial mores and frugal behavior:

1. There has been an explosion of debt that inhibits social mobility and ruins lives.  One example:  Between 1989 and 2001, credit-card debt nearly tripled, soaring from $238 billion to $692 billion.  By the end of 2007, it was a staggering $937 billion.
2. There is now a stark financial polarization.  There is the “investor class,” which has access to tax-deferred savings plans, etc.  And then there is the “lottery class,” which has little access to such tax-deferred plans but does have access to payday lenders, credit cards and lottery agents.  Further, when the social inhibitions that have guided financial behavior are gone and when an attitude of spend and borrow now for the good life reigns, we are cultivating disaster.  We have been passionate as a civilization about protecting the environment and inhaling tobacco.  However, the US is not socially conscious or sensitive about money and debt. 

Who is to blame?  Brooks spreads the blame all around the culture:

1. State governments hawk their lottery products, one on which 20% of Americans spend about $60 billion per year.  This is not only stupid, it is regressive, for the very people who buy lottery tickets are those less able to afford it.  It is ethically reprehensible, for the “government, the guardian of order, [is] telling people that they don’t have to work to build for the future.  They can strike it rich for nothing.”
2. “Payday lenders” offer fast cash at absurdly high interest rates to 15 million people each month.
3. Credit card companies target the young and vulnerable—55% of students in their final year of college carry 4 or 5 credit cards!!
4. The US Congress and the President now consider it standard operating procedure to borrow and place the burden of paying the debt onto the next generation!

So, what do we do?  First of all, the nation must return to the virtues that Franklin promoted.  Discipline and self control are virtues equally promoted in the New Testament.  American culture has a live-for-the-moment-mentality that drives this culture of debt.  This must be checked or we will self-destruct as a civilization.  For that reason, Barbara Dafoe Whitehead has argued that we must raise the public consciousness about debt the way anti-smoking activists did two decades ago.  It, to a great extent, has worked.  She also suggests that institutions that already exist or that need to exist promote thrift and frugality.  I can think of two institutions that can be most effective—the church and the school system.  Basic to any Christian worldview is good stewardship:  Because everything belongs to God, we must be good stewards of everything, including our finances.  Thrift and frugality are basic to that worldview.  Further, the school system should stress and emphasize at all levels thrift and frugality.  This civilization must make it respectable once again to save for the future.  At every level we must enforce and reinforce the virtues of frugality and thrift.  If we do not, we will have mortgaged our future to our grandchildren, and the Peoples Bank of China and the Middle Eastern oil barons will own the US.  Proverbs 24:31-34 and 30:25 must be the watchword of this new national consciousness.  It is not too late, but we can delay no longer!

See Edmund Morgan’s wonderful summary of Franklin’s 13 virtues in the New York Times (31 December 2002) and David Brooks’ in the same paper (10 June 2008).

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