Abundant Social Change

by Don Boudreaux on July 22, 2007

in Complexity & Emergence, Environment, Everyday Life, Standard of Living

I just started reading Brink Lindsey’s new book, The Age of Abundance: How Prosperity Transformed America’s Politics and Culture.  I’m just about 60 pages into it, and so far I’m enjoying it immensely.  I especially like this observation (that appears on page 3):

American capitalism is derided for its superficial banality, yet it has unleashed profound, convulsive social change.  Condemned as mindless materialism, it has burst loose a flood tide of spiritual yearning. The civil rights movement and the sexual revolution, environmentalism and feminism, the fitness and health-care boom and the opening of the gay closet, the withering of censorship and the rise of a "creative class" of "knowledge workers" — all are the progeny of widespread prosperity.

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{ 31 comments }

David White July 22, 2007 at 11:05 am

But is it real prosperity or faux prosperity?

"70% of all households own their home. Keep in mind that the net worth statistics include a large portion of equity in home. So even though the numbers may look high, it is because we are in a nationally distorted housing market. So you can see that a national decline in housing will impact a large portion of Americans. I’m fascinated with the 70% number. 70% of our economy is based on consumption and 70% of Americans own their home. Coincidence? I think not."

http://www.financialsense.com/fsu/editorials/drhousing/2007/0721.html

Thus, Americans haven't so much earned their way propperity as they've taken advantage of the free lunch phony money and easy credit.

And there's no such thing as a free lunch.

Dennis Mangan July 22, 2007 at 1:33 pm

And "profound, convulsive social change" is a good thing?

Sam Grove July 22, 2007 at 2:52 pm

What has saved is the great leaps in productivity.
We ought to be much wealthier, but the cost, waste, and inhibiting effects of government has cost us dearly.

Keith July 22, 2007 at 8:25 pm

Qoute from financialsense.com via David White: "70% of our economy is based on consumption and 70% of Americans own their home. Coincidence? I think not."

Qoute from Adam Smith: "Consumption is the sole end and purpose of all production."

David White July 22, 2007 at 9:46 pm

Keith,

No argument with Adam Smith there, as consumption is obviously the only reason anyone would produce anything. But if production isn't derived from savings — i.e., from DEFERRED consumption (which is all savings are) and is instead derived from savings-free money and credit creation — then the production-consumption dynamic is corrupted, and society must accordingly suffer the consequences.

Thus, the 70% of Americans who "own their homes" do so largely in name only, having borrowed their properity into existence rather than working for it. (What else is an asset that appreciates while you watch the flat-screen TV that you bought with a home equity loan?)

And the bill is now coming due.

Ken July 22, 2007 at 10:59 pm

Why is this website called Cafe Hayek? I haven't seen one picture or reference to Salma Hayek anywhere on this blog!

Brad July 22, 2007 at 11:45 pm

David, So you're saying that consumers would be in a better debt situation buying their flat-screens on unsecured credit cards. Whatever. I think what you're doing here is a combination of nostalgia for 25 years ago when credit was comparably very expensive and overstating macro blips like the sub-prime lending problems of late.

Also, I'm curious about something… How do you get a HELOC on reasonable terms without owing significantly less than your property is worth? Given the tax advantages and rate advantages compared to credit cards, it's a scam we would all surely like to get in on!

Russell Nelson July 23, 2007 at 2:49 am

Dennis: go up to a black person, call them a nigger, come back here, and THEN tell us that "profound, convulsive social change" is a bad thing.

Russell Nelson July 23, 2007 at 2:53 am

Ken: you haven't been reading long enough. Be patient.

Dave White: do you have ANY idea what you are talking about? Maybe you need to read more Hayek as a backgrounder? Errr, that would be Friedrich, not Salma.

lowcountryjoe July 23, 2007 at 7:25 am

And there's no such thing as a free lunch.

That's right, David. You'd really love the consequences of being a saving nation, but that's ok with you because at least the declines that would be felt wouldn't be 'phony'.

Perhaps you should tell us here where the incentives to save are and how those incentives are better than those that exist for investing. The return to investors are without limit while the returns to lenders are bound by the terms of the loan…it is irresponsible for an investor to repay a loan by giving more money back than promised and it is borderline stupid for a lender to grant loans to people/entities that have no solid reason to use the money (or have solid repayment histories). Combine that with the tax rate on interest and repayments that allow the saver to just barely keep their purchasing power.

And the bill is now coming due.

Are you actually suggesting that Americans cannot continue to make the loan repayments? With all of the equity that Americans have, we can do it and have much to spare…heck, even the physical assets that Americans own will still be there for usage even if the equity evaporated in some dooms day scenario!

The saver-debtor debate is a tired one. It would be a far better use of time to argue whether we should be an entitlement nation with promises to pay-out massive benefits.

Dennis Mangan July 23, 2007 at 9:09 am

Russell Nelson: When your teenage daughter gets pregnant, your car is stolen, your job taken by an illegal alien, tell me that those are good tings. The idea that change in and of itself is good is absurd.

vidyohs July 23, 2007 at 9:34 am

The comments are interesting but I can't see where any of them really has anything to do with the validity of the quoted observation.

American (USA) capitalism began with the colonization of America, not just with the creation of easy credit. I saw no time limits in the observation quoted by Don.

It is obvious to anyone who looks that capitalism is truly the engine that pulls the train of freedom. Freedom anywhere, not just in the USA.

Surely there is no one who reads and responds to the postings on this website who would argue that people who live at a subsistence level have the motivation or the opportunity to make environmentalism, treatment of gays, fitness and health, feminism, sexual revolution, and censorship, keystone concerns of their daily life.

The ability to focus on those concerns comes only with the leisure that wealth brings; and, capitalism brings wealth in sufficient quantities to sufficient people that those concerns have been addressed,
some still are being addressed today, in those countries (USA, Canada, England, France, Japan, to name most) where capitalism exists or existed long enough to provide the wealth that gives the leisure to pay attention to other than filling the belly and putting clothing on the back.

Look at the history of capitalism's competition.

I personally thought the quote Don gave us was right on target and reflects what I see when I look at the world.

vidyohs July 23, 2007 at 9:43 am

Dennis,
I don't see it.

"When your teenage daughter gets pregnant, your car is stolen, your job taken by an illegal alien, tell me that those are good tings. The idea that change in and of itself is good is absurd."

How did profound convulsive change or capitalism cause your daughter to get pregnant?

How did profound convulsive social change or capitalism get cause car to be stolen?

How did prfound convulsive social change cause your job to be lost to an illegal alien?

I agree with you that change for the sake of change is not necessarily progress or good; but, to blame change as you did for the things you did, that is flawed thinking.

Even in static societies girls get knocked up, things are stolen, and workers are under bid.

John July 23, 2007 at 11:45 am
Jon July 23, 2007 at 12:16 pm

"Even in static societies girls get knocked up, things are stolen, and workers are under bid." – vidyohs

The difference is that in a capitalist system those children have a great opportunity to be more than a serf, thief … or congressman (which is worse than a thief).

No other system offers the freedom to do as one wishes with oneself as capitalism.

Sam Grove July 23, 2007 at 12:42 pm

What matters is that people keep going to work providing the goods and services that they consume.

Tim July 23, 2007 at 1:37 pm

If you look at the longer historical record, social change and improvement generally only happens in times of economic prosperity. But since economics is a two-handed science, there are always displacements that accompany the progress. What a truly wise nation needs to do is find ways to help those caught in the transition, without entitling everyone. But it is generally harder to get political buy-in for those programs.

Dennis Mangan July 23, 2007 at 2:11 pm

You folks are missing the point. Over the last half-century, the wonders of "profound convulsive social change" have brought about massive rises in illegitimacy rates, crime, drug use, AIDS, illegal immigration, rates of psychological depression, divorce, etc. If capitalism wants to take credit for profound convulsive social change, then it can't just take credit for the good ones.

Sam Grove July 23, 2007 at 2:52 pm

Capitalism can only take credit for prosperity. What people do with that is their own responsibility…or lack thereof.

We can lay a lot of blame for that on the illusion that government protects us from the consequences of our choices. It can, at best, merely delay them.

Jon July 23, 2007 at 3:16 pm

I don't think you can blame AIDS, divorce, psychological depression, infidelity, illegitimate children, and drugs on capitalism.

If anything capitalism can provide solutions to those problems. I might not know HOW capitalism can solve those, but I bet some entrepreneur somewhere is playing with ideas on how to provide solutions to those problems.

Methinks July 23, 2007 at 4:55 pm

illegitimacy rates, crime, drug use, AIDS, illegal immigration, rates of psychological depression, divorce, etc. If capitalism wants to take credit for profound convulsive social change, then it can't just take credit for the good ones.

If you think those social changes are the fault of capitalism then you're going to have to explain a few things.

Why is socialist France the world leader in consumption of anti-depressants?

Why did illegitimacy , crime rates, depression, alcoholism, drug use, divorce rates and infidelity all suddenly spike and remain high (much higher than in capitalist countries – especially the U.S.) in the Soviet Union? Why did AIDs spread faster there than it did in the capitalist United States?

The most amusing accusation really is AIDs. How is a virus the result of capitalism?

Socialist countries across Europe have as much an illegal immigration issue as the United States does.

Illegitimacy rates steadily increased among American blacks since the introduction of the socialist institution known as The Great Society and the start of welfare entrapment program. Marriage rates among blacks have declined precipitously since then as well.

You'll also have to explain why marriage has been declining and illegitimacy has been on the rise for decades in socialist Europe.

Now, let's take a look at things that didn't change in socialist countries: racism, for one. Since a bureaucrat decides who gets what, racism can continue unabated. Who will question it? "The people"? what do people matter in an unaccountable socialist regime? Jews in socialist Russia were told they couldn't get into universities despite getting the highest scores on entrance exams because "we have enough of your filthy presence here". Nice.

What socialist countries haven't seen that capitalist countries have is prosperity (the kind that doesn't derive from free riding, that is).

vidyohs July 23, 2007 at 5:21 pm

To:
Methinks
Sam Grove
Good comments, and informative.

Jon,
I don't get your focus on the last paragraph of my post, did you not read all that above it? 'Twas necessary to the understanding of the sarcasm in my last paragraph.

muirgeo July 24, 2007 at 1:53 am

"….it has burst loose a flood tide of spiritual yearning. The civil rights movement and the sexual revolution, environmentalism and feminism, the fitness and health-care boom and the opening of the gay closet, the withering of censorship and the rise of a "creative class" of "knowledge workers"…..'

NOTE: All these things happened Post-FDR…….just saying.

tarran July 24, 2007 at 7:07 am

…and no doubt occured later thanks to the 20 years of depression FDR helped engineer:

The New Deal Debunked (again)

Many people unthinkingly accept the propaganda that FDR's attempts to copy Mussolini's policies in the U.S. somehow improved things.

An economist, New Republic columnist and Roosevelt contemporary John T Flynn wrote a book in 1944 on FDR that you might find eye openining muirego:

As We Go Marching

It chronicles FDR's love affair with fascism, his attempts to implement fascist policies that benefitted himself and his friends in big business and big labor, and the way these policies helped foster not only a nation-wide depression but an international one, worsening the crises that led to the breakout of World War II.

Jon July 24, 2007 at 10:18 am

OH look! The troll returns…

"NOTE: All these things happened Post-FDR…….just saying."

Because FDR is the source of all happiness and progress in life [/sarcasm]

Henri Hein July 24, 2007 at 4:15 pm

"OH look! The troll returns…"

Jon, this is needlessly offensive. You may disagree with muirgeo, but he's no more a troll than you are.

Jon July 25, 2007 at 9:21 am

On the contrary, I think you'll be hard pressed to show that I exhibit the same pattern of behavior that certain others might.

vidyohs July 25, 2007 at 10:04 am

muirgeo,
Really, all post FDR?

Sexual revolution, ask your great great granny about those flapper girls and their loose conduct in the early twenties…ahem,..the "roaring twenties".

How about that feminism displayed in the Women's Sufferage movement and the liberation that spawned……I believe also well before FDR. I believe that this includes both concepts of civil rights movement and feminism, don't you agree?

As to the other topics, I suggest that they all came about in spite of FDR and the socialist policies he infused into the American culture, not because of him and his ilk.

Sam Grove July 25, 2007 at 10:44 am

Also, during WWII, many women entered the work force, breaking with tradition and fostering greater financial independence in women.

Of course, there are those who think this is all bad, and it is true that there is a downside, some of which is due to the continuing increase in the expense of government prompting many families to pursue two incomes.

Mark Brady July 26, 2007 at 12:52 pm

Although I haven't read the book–and I've yet to look at a copy–I have to say on the basis of the quotation you provide, Marx, Schumpeter, Mises, Hayek, and many others have written more elegantly and insightfully on the phenomenon that Brink Lindsey discusses.

Troy Camplin, Ph.D. August 7, 2007 at 10:44 am

What? A complex economic system — one that comes closest to the way the natural world works — results in complex indivudual behavior and complex culture? How odd! Who would have thought that a complex system would result in the creation of ever-greater complexity? (Unless you're an evolutionary biologist, a systems theorist, an informaiton theorist, a game theorist, a bios theorist, a nonlinear dynamist . . .)

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