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March 12th, 2009 - click opera — LiveJournal
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March 12th, 2009
Thu, Mar. 12th, 2009 04:08 am

"Responsible middle" gets no help in crisis, runs the headline in the International Herald Tribune (which I guess means the story ran first in the New York Times). The article tells the tragic tale of a certain "Zach". Zach believes in Adam Smith's idea that the common good emerges when everybody works for their own selfish interest. He also believes in financial responsibility. But, as the article says, "if you’ve behaved responsibly and prudently all these years, you’re on your own. But if you’ve made colossal mistakes of greed and misjudgment — either by selling billions in mortgages to people who couldn’t afford to pay you back or by being one of the people whose eyes were bigger than their wallets— you might just get rescued, at the expense of taxpayers like Zach."



This theme -- that responsible people, people who save, are treated like criminals, while people who act badly, stupidly, greedily and wildly are bailed out -- also pops up in Analysis: The Threat of Thrift (listen for the next few days here). But Analysis doesn't just say the thrifty, virtuous person is treated like a criminal. It goes some way to saying the virtuous saver actually is a criminal.

Since I didn't study economics, this all comes as a bit of a bit of a shock to me. I'm a fairly typical cultural protestant: I value thrift, economy, cheapness, poverty, austerity. I value them on a financial level, a moral level, and also an aesthetic level. Put it this way -- I think David Bowie's son Duncan Jones looks a hell of a lot better, wiser and nicer than the guy doing a cabaret act in Las Vegas under his old name, Zowie Bowie. (In fact, Mr Bling-Ring-A-Ding is called Chris Phillips.)



But the economists interviewed in The Threat of Thrift say very little about the upside of austerity, and an awful lot about its downside. Peter Heslam of Cambridge University quotes Keynes: "The best guess I can make is that when you save five shillings, you put a man out of work for a day." Patriotic housewives, said Keynes, should hit the shops, doing themselves good and adding to the health of the country. This is called the paradox of thrift. Thrift may be a virtue for the individual, but it isn't a virtue for a larger unit, like a nation. (This in turn is called the Fallacy of Composition: the mistake you make when you infer that something is true for the whole when it's only true for some part of the whole.) Keynes said that in a recession it wasn't thrift which would save us, but the government, which could spend its way out of the vicious circles started by the paradox of thrift. And this is what most governments across the world are now doing.



So talk of the unfairness of "penalizing the virtuous", of returns to "conspicuous austerity", and of the new fashionability of "deferred gratification" is actually -- according to Keynes and his followers, anyway -- more socially sinful than talk of bling. Come back, Zowie Bowie, all is forgiven! And bring your chunky rings! As Anatole Kaletsky, chief economic commentator at The Times tells the Analysis programme, it's not saving that creates wealth, but investment. So if you save more than you invest, as Japan has been doing, your economy will decline, you'll create unemployment, and you'll spread that problem to the rest of the world. Bad Japan! Bad thrifty Japan!

Thrift is only a virtue on an individual level. You save because you might need the money "some rainy day". You "make do and mend", repairing old things rather than buying new ones. You eat old food in the fridge. You throw the fridge away. You feel ashamed when you waste things. You don't replace stuff that's not broken. It's all common sense. And it's all, apparently, wrong.

Unless, of course, we bring ecology into the picture. Because the earth cannot sustain endless economic growth. In fact, just bringing everyone in the world to the level Americans are at today would require multiple planet earths, in terms of the natural resources we'd need. (Check how many earths your lifestyle would require if everyone had it with this quiz. Mine would require two.) It can't happen; we just have one. So, instead of America, we need to follow the example of China, which is becoming, according to Peter Heslam of Cambridge University, "one of the great thrift nations", increasing its economic clout without, so far, increasing its levels of personal waste, personal debt and resource use to anything like American levels.



But even Peter Selby, the former Bishop of Worcester, can't bring himself to recommend austerity, not even as an eco-ethic. The sustainability thing is not about thrift, he says; instead we need to keep a flexible approach, saving when it's appropriate, borrowing when that's the right thing to do. You were burning to hear the bankers cast into hell with a fiery sermon? Tough shit.

Well, I guess it's all there in Christ's story of The Prodigal Son. The young son is a bling wanker who "wasted his substance with riotous living". The older son is virtuous, saves, stays down on the farm, works hard. The young son comes back and his father, inexplicably overjoyed, kills the fatted calf. The virtuous and austere older brother throws a hissy fit.



"Lo," he says to his dad, "these many years do I serve thee, neither transgressed I at any time thy commandment: and yet thou never gavest me a kid, that I might make merry with my friends: But as soon as this thy son was come, which hath devoured thy living with harlots, thou hast killed for him the fatted calf."

And his dad tells him -- the "responsible middle" -- to fuck off, basically. You win again, prodigal wanker!

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