Friday, August 7, 2009

Thrift Culture

"If Franklin preached a philosophy of frugality and careful management of resources, borrow and spend has become the ethos of our time."

Michael Jonas, "Ben Franklin Was Right," CommonWealth, Summer 2009

What's thrift got to do with it? I found this article and conversaton peculiar in that it advertised talking about thrift but ended up talking about the "debt culture" fueled by payday lenders, credit cards, and subprime loans. Where is Ben in this conversation? I agree that a large part of the debt problem is high cost financial products and services, and that too often we jump to blame individuals and their lack of thrift or financial smarts when they are really just being preyed upon.

I guess I'll have to read Barbara Dafoe Whitehead's Franklin's Thrift: The Lost History of an American Virtue. Maybe invoking thrift is just a play on words, thrift referring to thrift institutions like credit unions, savings societies, and S&Ls that offer fairly-priced products and institutionally promote thriftiness. Franklin promoted them.

Saying all that, there are lifestyle choices above and beyond the transactional and emergency loans that get people into trouble. And a lot of people on the lower end of the income spectrum operate with structural deficits that need bridging -- but don't have easy access to financial institutions.

As I recall, Franklin had a lot to say about individual responsibility, keeping track of daily transgressions, and budgeting. This is about norms, role models, skills, and reinforcement. I would have liked to learn more.

Given our rising savings rate, thrift also seems to result from being scared about the economy, loss of a job, foreclosure, etc. Bad times encourage people to buy less and start their own gardens. How do we keep this thrift alive when things get better?

No comments: