Benjamin Franklin spread a practical gospel that emphasised hard work, temperance and frugality. Millions of parents, preachers, newspaper editors and teachers expounded the message.
The result was quite remarkable. The US 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.
The deterioration of financial mores has meant two things. First, it’s meant an explosion of debt that inhibits social mobility and ruins lives.
Between 1989 and 2001, credit-card debt nearly tripled, soaring from $238 billion to $692 billion. By last year, it was up to $937 billion.
Second, the transformation has led to a stark financial polarisation. On the one hand, there is what the report calls the investor class.
It has tax-deferred savings plans, as well as an army of financial advisers. On the other hand, there is the lottery class, people with little access to financial planning but plenty of access to payday lenders, credit cards and lottery agents.
The loosening of financial inhibition has meant more options for the well-educated but more temptation and chaos for the most vulnerable. Social norms, the invisible threads that guide behaviour, have deteriorated.
Over the past years, Americans have been more socially conscious about protecting the environment and inhaling tobacco. They have become less socially conscious about money and debt.