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.
First, his history is way off. The United States has long had a history of financial bubbles, manias and panics--it is hardly a recent innovation. Speculation in the United States is older than the country itself, going back to bonds issued by the states to pay their soldiers during the Revolution. Speculators bought up many of these at a discount, leading to a controversy when Hamilton moved to enact Federal assumption of the various debt instruments out there as to whether they should be reimbursed at the face value of the bonds they had purchased at a discount. In fact, that prospect led to a speculative mania at the very onset of the New York Stock Exchange in bank notes and government debt instruments and first stock market crash in 1792.
Since then, there have been financial panics in 1819, 1837, 1857, 1869, 1873, 1892, 1907, 1929 (how could he have missed that!). The crash of 1869 was caused by an attempt by speculators to corner the gold market; those of 1857 and 1873 by railroad speculators. The crash of 1929 came after years of widespread stock speculation fueled by margin buying. These are hardly examples of thrift and frugality.
The so-called Gilded Age was marked by displays of wealth that matched what we had in the 1990s and that gave rise to the phrase "conspicuous consumption". The 1920s were proverbial for consumption ("The Great Gatsby") and an increase in inequality as workers suffered a decline in real wages. The boost in consumer purchases of new products was financed, therefore, by an increase in retail credit and consumer debt--another 90s parallel.
Indeed, the idea of the 1990s that new technologies and increases in productivity caused by better management techniques created a new economy that wasn't subject to the old rules had its parallel in the 1920s.
He should remember that this country wasn't just founded by Puritans. There were merchant adventurers in Virginia and New York. In Devil Take the Hindmost, Edward Chancellor observes that the colonial venture behind the settling of this country was a gamble of sorts. This is enhanced by the fact that, without an aristocracy of medieval vintage, status was more a function of wealth than birth.
Of course, by blaming a corruption of morals, Brooks can ignore the lack of government oversight or deregulatory measures such as the repeal of Glass-Steagall. He can ignore the fact that manias, panics and crashes, to evoke the title of Charles Kindleberger's book of the same name, have had a similar rhythm in American history and often were followed by regulatory and legal reform. It's so much easier to play the neo-con game and wail about contemporary society's fraying moral fiber. Too bad that it has a very scant basis in history.
0 comments:
Post a Comment