05 Jun 2011

Changing Times

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Walter Russell Mead (who has recently been on a roll, producing a series of very intelligent articles) argues that the imminent end of the entitlement era marks as profound a change in the American way of life as the century ago passing of the family farm and the transition to majority employment in towns and cities.

The death of the family farm didn’t kill the American republic for several reasons. First, to some degree Jefferson was wrong and Hamilton was right. A strong manufacturing and financial sector can strengthen democracy under the right conditions; ancient, slave-holding Rome was less like modern capitalist New York and London than Thomas Jefferson thought.

But under American conditions there was something else: the end of the family farm did not mean the rise of a propertyless proletariat in the United States. Bankers like A.P. Giannini made the argument that the thirty year mortgage was a weapon against Marx: if the average American family no longer owned a farm, it could still own a house.

Thanks to home ownership, post-agricultural America remained a land of mass property ownership and that experience continued to inform American political and social values. American neighborhoods are still schools of political engagement; it’s clear who keeps up their property, who takes the lead in community activities, who leads the PTA and who coaches the youth league. Property ownership continues to serve as a political tutor; American voters want better municipal services, and they don’t like high property taxes. They have to think about the relationship between the two in every election, and their experience in local affairs continues to inform their ideas about national policy.

At the same time, the fact that most Americans buy their homes through mortgages, and that they have to keep those payments up or lose the old homestead, teaches responsibility and steady habits. If the farmer didn’t get up at dawn to plow the north forty, there was nothing to eat in the winter. If the suburbanite doesn’t get in the car and head onto the freeway every morning, the bank balance sinks and the repo men will come and take the house away. Home ownership also teaches people about investments and compound interest (although lately it has been giving us a painful introduction to bubbles and downturns).

Both versions of the American Dream had this in common: the farm in the valley and the box in the burbs helped the American people develop the skills and the values necessary for successful republican government.

From this standpoint, suburban America looks like a watered down but still potent blend of the original American farmer’s republic. The inherited values and culture coming to us from the old days plus the still potent force of mass home ownership have kept the United States from retracing the steps of older democracies on their slow decline. So far.

But our consumer republic is clearly in trouble. Economically, as I wrote earlier this week, the model is breaking down. The consumer republic is based on debt and depends on high consumption. We are nearing the limits of that kind of economy. The country’s external debt, the explosive growth of federal debt and the weak balance sheets of consumer households are all pointing in the same direction.

The cultural and social weaknesses of the consumer state are if anything more troubling. While suburbia is not the kind of alienating horror show that Marxist critics make it out to be, it is a less effective school for citizenship and character than the family farm. Daniel Bell wrote about the cultural contradictions of capitalism more than thirty years ago; life in a consumer society does not support the virtues and ideas that a healthy society requires.

More broadly, Huck Finn was right and the Widow Douglass was wrong: a holistic life in which family, work, education, leisure and production are all blended and mixed is healthier than an existence in which every sphere of life is rigidly set off from the others. it is not good for children to work long hours in textile mills; it is also not good for them to grow up without participating in and learning about the productive labor that is such a big part of what it means to be human. Family bonds are weaker now that husbands and wives spend so much less time together and mostly cooperate to spend money rather than working together to make it. The family is less of a unit because the real business of each member of the family takes place in some other environment be it the office, the factory or the school.

The special shape of modern and suburban family life is part of the blue social model I’ve been posting about on this blog and the hollowing out of blue society is increasingly felt within as well as around the contemporary American family. The suburban consumption based nuclear family is increasingly under stress; family budgets and time are increasingly on the edge.

More, the very entitlements most under pressure economically are those that have allowed the multigenerational family to yield to the suburban nuclear idyll. Defined benefit pensions, Social Security, home equity and Medicare allowed older Americans to live independent lives and reduced the need for solidarity between the generations. The generations, like the widow’s vittles, were all cooking in their separate pots. …

The one thing I do know is that change is on its way — more fundamental, more challenging, and also perhaps more exhilarating than many of us are ready for. The health of the American economy is going to require us to move away from the credit card economics of the consumer republic. The health of American society and democracy require that we move beyond the life of the last eighty years.

Read the whole thing.

One Feedback on "Changing Times"


The decline of debt-driven consumption as an economic driver may or may not be desirable, but it’s dictated by demography. People’s spending habits change as they move from household formation and family raising towards pre-retirement and retirement. The so-called baby-boom generation is in phase shift, and there will not be another consumption “bulge” to replace it for more than a decade. Remember, too, that during the first half of the 00s, at least 2% of annual GDP growth was driven by people borrowing against equity in their homes. That source of funding has evaporated and will also not resurface for at least a decade.
The only thing that would “save” the economy would be a SIGNIFICANT reduction in government spending and a major reduction in corporate taxation, and that doesn’t not appear to be in the cards either. Half the country pays no income taxes today and thinks that The Rich can be infinitely tapped to subsidize their desires.


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