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Michael Maiello's picture

The Selfish American?

This morning, David Brooks gives us what's been a truism about American life since I was born -- that we are a bunch of selfish short-termers, unwilling to make sacrifices for future generations in the manner of the nobler Americans who came before us.  This criticism has been lobbed at every generation since the Baby Boomers came of age.

The evidence is the usual litany -- public company executives and stock investors looking for quarterly rather than long term results; pension funds (private and public) draining resources from future investment; debt driven consumption; a lack of infrastructure spending.

Brooks argues:

"The Great Depression and World War II forced Americans to live with 16 straight years of scarcity. In the years after the war, people decided they’d had enough. There was what one historian called a “renunciation of renunciation.” We’ve now had a few generations raised with this consumption mind-set. There’s less of a sense that life is a partnership among the dead, the living and the unborn, with obligations to those to come."

I thought about this, walking to the gym this morning because it just seems right, but it doesn't really stand up to scrutiny.  For one thing, Americans sent two more generations involuntarily into combat after World War II, and for far less justifiable reasons.  Resetting the nation on a path where it could only fight the wars that it could cover with volunteers was a good step, if not for the complicating factor that those with the least political and economic clout have the most reason to enlist.  But we shouldn't forget that it's actually people born after the end of the Vietnam draft who are the first generation of men who never had to consider compulsory military service.  It's a relatively recent advance.

As is, by the way, the explosion of consumer credit and mortgage borrowing.  All of that really coincides with the modernization of finance that started in the 1980s and the wage crushing advent of globalization that also started in that time.  Americans don't borrow because they're selfish short-termers.  They borrow because inflation has outpaced wages.  That is an elite, not a societal failure.

The idea that spending on public and private pension programs is too high should be laughed out of polite society.  The spending isn't too high.  The spending is to cover obligations made decades ago.  The argument that it's too high is an argument to renege on promises to future generations.  How does that square with Brooks' argument that we should see that "life is a partnership among the dead, the living and the unborn, with obligations to those to come"?

Finally, I'm all for infrastructure spending, but not on Brooks' terms:

"If the president were to propose an agenda for the future, he’d double spending on the National Institutes of Health. He’d approve the Keystone XL pipeline. He’d cut corporate tax rates while adding a progressive consumption tax. He’d take money from Social Security and build Harlem Children’s Zone-type projects across the nation. He’d means test Medicare and use the money to revive state universities and pay down debt."

Should the revival of state universities really be paid for by Social Security and Medicare recipients?  Really? Seems to me that while Brooks is worried about the intergenerational pacts between Americans that he's letting the wealthiest (many of them the beneficiaries of intergenerational wealth transfer) slide on their obligations to the people they share society with right now.  It's a clever dodge because it sounds good.  Few would deny that Americans (and people in general) are short sighted and prone to pleasure seeking. But the tendency towards self-flagellation that Brooks endorses can easily let the real culprits off the hook.

I think it all comes down to a Wall Street fight.  A battle between banking policy and fiscal policy.  The banks want to have all retirement funds and insurance funds in their control to make short term profits.  Fiscal policy is long term government control of the economy for the common good.  Most people don't have any understanding about how money grows, flows and kept accounted by governments.  It is different from checkbook accounting and business accounting. They don't understand the limits of a market economy. So some that now have seats in our government belong to the money brokers who are pushing to limit government programs that the banks want to profit from. So false information like "we have to limit our debt and spending so our grandkids won't be burden with our debt."  To limit the debt and spending is to limit the ability for fiscal policy power over money.  It also limits the growth of the real economy. You just have to take a look at Europe right now to see that.  Look where the big fights are in banking oversight and public controlled retirement insurance funds.  They refuse to pay our debts until we give up public programs like SSI and Medicare. Mr Brooks don't know what he is talking about and Mr Krugman does a good job of pointing that out.        

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