Sheldon Garon has a provocative and informative piece on the op-ed page of today’s New York Times. His title is “Why We Spend, Why They Save;” and his argument is distilled from his recent book, Beyond Our Means: Why America Spends While the World Saves. The “they” of his piece today is a bit more specific than the title of his book, since all of his contrasting examples come from European countries. I suspect that “the world” is a bit too much of a generalization, Particularly if you are going to include much of the African and Asian continents.
Nevertheless, his point is a good one. The key differentiating factor between the United States and his counterexamples, according to Garon, is that, as a culture, we lack “a balanced approach to saving and spending.” He then offers several examples of how saving is accepted as a way of life in major European cultures. By contrast, he describes conditions in the United States following the Second World War as follows:
The United States emerged from the war with unparalleled prosperity and hardly needed further savings campaigns. Instead politicians, businessmen and labor leaders all promoted consumption as the new driver of economic growth. Rather than democratize saving, the American system rapidly democratized credit. An array of federal housing and tax policies enabled Americans to borrow to buy homes and products as no other people could.
This “unparalleled prosperity” ultimately led to unparalleled deregulation, reinforced with an apparent amnesiac attitude towards the past history of the Great Depression. Garon then traces the nuts and bolts of the consequences of deregulation to current conditions in which most of the 99% have enough wealth to consider saving any of it.
I would like to suggest that another approach to Garon’s argument may be framed in terms of how we think about time. Consumption is driven by thinking about the present, which entails an entirely different mindset from thinking about the future, that being the motivation behind spending. Furthermore, that motivation can be reinforced by thinking about the past, at least as far back as that history of the Great Depression. I have argued often that we are a culture that has lost touch with the value of history and that this has induced an underlying amnesia in our thinking about economics. I have further argued that our consumerism is an addiction that may have emerged from that “unparalleled prosperity” but is now aggravated by the power of our many recent technological innovations. It is through that addiction that our ability to think about the future has been suppressed, resulting in our radical imbalance between saving and consumption, particularly in comparison to our European cousins.
In other words consumerism may have undermined more than our grasp of history and savings in “economic reasoning;” we may also be experiencing a more pernicious atrophy of time-consciousness itself!