Bobo typed a thing called “The Great Seduction,” and says the most rampant decadence today is financial decadence, the trampling of decent norms about how to use and harness money. He sings the praises of bourgeois values, as if one of today’s crop of Republicans would know one if it bit him. Mr. Herbert’s column is titled “Out of Sight.” He says the flip side of the American dream is when the economy leaves some youngsters below the bottom of the employment ladder. Here’s Bobo:
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.
Bourgeois values, yeah, that’s what today’s Republicans are all about… Riiiiight, Bobo. Here’s Mr. Herbert:
When the dismal unemployment numbers were released on Friday (at the same time that oil prices were surging to record highs), I thought about the young people at the bottom of the employment ladder.
Below the bottom, actually.
A shudder went through the markets when the Labor Department reported that the official jobless rate had jumped one-half a percentage point in May to 5.5 percent — the sharpest spike in 22 years.
The young people I’m talking about wouldn’t have noticed. These are the teenagers and young adults — roughly 16 to 24 years old — who are not in school and basically have no hope of finding work. The bureaucrats compiling the official unemployment rate don’t even bother counting these young people. They are no one’s constituency. They might as well not exist.
Except that they do exist. There are four million or more of these so-called disconnected youths across the country. They hang out on street corners in cities large and small — and increasingly in suburban and rural areas.
If you ask how they survive from day to day, the most likely response is: “I hustle,” which could mean anything from giving haircuts in a basement to washing a neighbor’s car to running the occasional errand.
Or it could mean petty thievery or drug dealing or prostitution or worse.
This is the flip side of the American dream. The United States economy, which has trouble producing enough jobs to keep the middle class intact, has left these youngsters all-but-completely behind.
“These kids are being challenged in ways that my generation was not,” said David Jones, the president of the Community Service Society of New York, which tries to develop ways to connect these young men and women with employment opportunities, or get them back into school.
It is extremely difficult because, for the most part, the jobs are not there and the educational establishment is having a hard enough time teaching the kids who are still in school.
“Schools have not made much of an effort to bring this population back in,” said Mr. Jones. “Once you fall out of the system, you’re basically on no one’s programmatic radar screen.”
So these kids drift. Some are drawn to gangs. A disproportionate number become involved in crime. It is a tragic story, and very few people are paying attention.
The economic policies of the past few decades have favored the wealthy and the well-connected to a degree that has been breathtaking to behold. The Nation magazine has devoted its current issue to the Gilded Age-type inequality that has been the result.
Just a little bit of help to the millions of youngsters trying to get their first tentative foothold in that economy should not be too much to ask.
It’s not as if these kids don’t want to work. Many of them search and search until they finally become discouraged. The summer job market, which has long been an important first step in preparing teenagers for the world of work, is shaping up this year as the weakest in more than half a century, according to the Center for Labor Market Studies at Northeastern University in Boston.
Now, with the overall economy deteriorating, the situation for poorly educated young people will only grow worse. As Andrew Sum, director of the Center for Labor Market Studies, told The Times recently:
“When you get into a recession, kids always get hit the hardest. Kids always go to the back of the hiring queue. Now, they find themselves with a lot of other people in line ahead of them.”
As the ranks of these youngsters grow, so does their potential to become a destabilizing factor in the society.
More important, the U.S. needs the untapped talent (and the potential buying power) in this large pool of young people, just as it needs the talents of the many other Americans of all ages whose energy, intelligence and creativity are wasted in an economic system that is not geared toward providing jobs for everyone who wants to work.
America needs to dream bigger, and in this election year, job creation should be issue No. 1. If I were running for president, I would pull together the smartest minds I could find from government, the corporate world, the labor movement, academia, the nonprofits and ordinary working men and women to see what could be done to spark the creation of decent jobs on a scale that would bring the U.S. as close as possible to full employment.
We’ve maxed out the credit cards, floated mindlessly in stock market bubbles, refinanced mortgages to death — now’s the time to figure out how to put all Americans to work.
