Wednesday, June 11, 2008

Values Conservatism

There is little doubt that all of the following characteristics are useful in producing a strong, cohesive, stable society:
  • Stable, dual-parent families.

  • Hard work.

  • Low debt.

  • A low incidence of "vice" (gambling, substance use/abuse, promiscuity, pornography, etc.).

  • A common faith, or at least a common moral outlook and confidence that adherence such an outlook will be rewarded.
These are of course traditional hot-buttons of what we call "values conservatives." We distinguish values conservatives from economic conservatives or libertarian conservatives or foreign policy conservatives largely because the values folks think that public policy should encourage these values.

I am not a values conservative. When it comes to values, I'm more libertarian, mostly because I don't believe that the government has a good record when it does any form of social engineering. And yet, I do believe that a system in which adherence to the above values is stable and beneficial. The trick is whether such a system can be engineered.

It's pretty clear that such a system, once achieved, and be maintained pretty cheaply, using principles that resist any social policies that might erode these values. Unfortunately, that ship has sailed. Cultural upheaval and very poor social policy in the 60's and 70's pushed American society past some tipping point. The traditional values are unravelling.

I have faith that the rules of complex behavior are likely to push our society toward some stable consensus on values. But it is no more than faith. If the instability persists, the West in general and the United States in particular are in for some very hard times.

Which brings us to David Brooks's op-ed on debt.
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.
Brooks goes on to suggest that there are concrete policy steps that could be used to re-stabilize American thrift:
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.
This is values conservatism in its purest--and best--form. The question is, will any of this work?

The American economy runs on debt. From a financial perspective, this isn't necessarily a bad thing. Access to short-term capital is essential for both individuals and small businesses. The problem is that consumers can slide over the event horizon with ridiculous ease, and creditors can become predators with only slightly less difficulty.

This seems like an area where some reform could be enacted. But the law of unintended consequences looms large here. Going cold turkey is a very painful way of breaking any addiction. When the pain is economic, it's advisable to move very cautiously.

UPDATE 6/11/08: A decent Ezra piece covering the same op-ed.

No comments: