Gone are the days when prudence, patience, frugality and self-discipline were part of a free market.
Today, capitalist societies and the consumerist movement vigorously bat for instant gratification and self-fulfillment in which the wisdom of “living within your means” is unheard of and has been replaced by a “jackpot mentality” that has creeped into the consciousness of most of us.
Tracing the evolution of the “Protestant work ethic” that propelled America’s economic success, Steven Malanga, senior editor of the City Journal in the US, says in place of thrift, America is now a nation of debtors, staggering beneath loans obtained under false pretenses.
“In place of steady, patient accumulation of wealth, they would find bankers and financiers who never pause to consider the consequences or risks of selling securities they don’t understand,” he says in his article “Whatever happened to the work ethic?”
He says the work ethic of yesteryear emphasized individual responsibility, hard work, honesty and deferred gratification which shaped the spirit of capitalism and helped it succeed. “The fusing of capitalism and these virtues once made up the American work ethic … the success of the early, struggling American settlements became part of the country’s civic fabric,” he writes. “It found its most succinct expression in the writings of Benjamin Franklin who says a reputation for honesty makes it easier to borrow money for new ventures.” Quoting sociologist Max Weber, Malanga says a man who displays self-discipline in his personal life inspires confidence in lenders and business partners.
Malanga added that by the 1960s, the modernist tendency had evolved into a credo of self-fulfillment in which temperance ceased to exist. “The cultural upheavals of the era spurred deep changes … Values like thrift which remained strong through the 1950s eventually gave way to a culture of uncontrolled consumption … there was a series of increasingly self-centered generations of young people displaying progressively more narcissistic personality traits including a growing obsession with ‘material wealth and physical appearance … the ’60s generation spawned the ‘Me Generation’ of the ’70s,” he says.
By the mid-80s, Malanga says, a poll of teens found that more than nine in 10 listed shopping as their favorite pastime. “Affluence, hedonism and radicalism were turning many Americans away from work and the pursuit of career advancement, resulting in a sharp slowdown in US productivity from 1965 to 1970,” he laments. “Being virtuous became something separate from work.”
“Get it now!”
Malanga goes on to say that with government policy reinforcing the “get it now” mindset, a new era of consumption based on credit blossomed in the resurgent 80s. “Ostentatious display of wealth grew more common. From 1982 to 1986, luxury car sales doubled in America. Consumer-credit debt rose nearly threefold to $2.56 trillion from 1980 to 2008 … Americans’ debt was growing because they were borrowing against their rapidly appreciating assets as fast as they grew,” he says. “The denouement of this transformation was the 20008 meltdown of world financial markets. Millions of fraudulent mortgages belonging to ordinary Americans triggered it.”
He cites the case of Bradley, a 27-year-old house painter with three kids. “He decided to try to make a killing in real estate as ‘he didn’t want to paint the rest of his life.’ With the help of shady mortgage brokers, he and his wife simultaneously purchased four homes intending to flip them for a profit. To buy the houses, the Collins had to make four separate mortgage applications, lie on each about their intentions, and hide each sale from the other three lenders. When the local housing market stopped rising, the couple defaulted on their loans, abandoning the houses to the banks and helping further drive down their neighbors’ real estate value … reports of mortgage fraud soared tenfold nationwide from 2001 to 2007. After examining portfolios of subprime mortgages, mortgage servicers found that up to 70 percent of them had involved some kind of misrepresentation … applicants exaggerated their incomes or underreported them to the IRS.”
Malanga says in this century, Americans seem to be learning a lesson which the philosopher and economist Adam Smith noted late in life: Government institutions can never tame and regulate a society whose citizens are not schooled in a common set of virtues. Our own institutions and the Filipino citizenry can very well learn from America’s mistake—we can’t live long enough to make it ourselves.