Fiscal Rectitude

Yes, the campaign to Fix the Debt has its share of self-serving plutocrats. But their demands and their campaign’s traction with some in the lower tax brackets cannot be explained by vulgar Marxism alone.

Consider the related dread of hyperinflation. In recent years, this fear has proven unfounded, but opposition to “printing money,” as Ed Kilgore said, “has never been strictly about economics or the ‘real world.'”

it has been, for eons, a moral issue to those who believe anything that makes life easier for debt and debtors must be morally ruinous to the individuals and the society that benefit. Go back and read the arguments made for the gold standard during the nineteenth century, or look at the famous Thomas Nast cartoons depicting the desire for an expanded money supply a “rag baby” with monstrous implications:

Thomas Nast's rag baby

According to this view, there’s no faking providence. As the recession began, Kilgore recalled, “it was common to hear conservatives say a recession would be a good moral tonic for the country, not only squeezing speculation out of the economy but validating the superior virtue of people whose ample means meant living beyond them would be virtually impossible.” Press a deficit hawk today about what really bothers them, and you often find, as Kilgore said, “a disdain for the ‘indiscipline’ of debtors, of those who insufficiently save, of those who aren’t as prudent and responsible as the deficit hawk.”

In The Search for Order, 1877-1920, the historian Robert Wiebe said, “throughout the nineteenth century a great many looked upon economic downturns as a moral judgment, precise punishment for the country’s sins.” They searched for the explanation of the country’s economic punishment from a “provincial, community-centered base.”

If there was an American philosophy in the [eighteen] seventies, it was a corrupted version of Scottish common-sense doctrines, taking as given every man’s [sic, recurs] ability to know that God had ordained modesty in women, rectitude in men, and thrift, sobriety, and hard work in both. People of very different backgrounds accommodated themselves to this Protestant code which had become so thoroughly identified with respectability, and the keepers of the national conscience applied its rules with slight margin for the deviant. An age in which the Supreme Court justified oppression of the Mormons because no right-thinking man could consider theirs a religion would not be remembered for its cosmopolitan tolerance. Americans were judging the world as they would their neighborhood. Their truths derived from what they knew: the economics of a family budget, the returns that came to the industrious and the lazy, the obnoxious behavior of the drunken braggart, the advantages of a wife who stayed home and kept a good house. In an island community people had little reason to believe that these daily precepts were not universally valid, and few doubted that the nation’s ills were caused by men who had dared to deny them.

Objecting to the contemporary revival of this theatrical vision, Paul Krugman said an industrial economy is not a morality play, but “a social system, created by and for people.”

Money is a social contrivance and convenience that makes this social system work better—and should be adjusted, both in quantity and in characteristics, whenever there is compelling evidence that this would lead to better outcomes. It often makes sense to put constraints on our actions, e.g. by pegging to another currency or granting the central bank a high degree of independence, but these are things done for operational convenience or to improve policy credibility, not moral commitments—and they are always up for reconsideration when circumstances change.

Too few deficit hawks are candid about (or even fully aware of?) the acute differences between an industrial economy and some idyllic, village autarky. The greatest fault of the deficit hawks, however, is not their moral concern per se, but their failure to accept responsibility for our social creations. In a time of crippling unemployment, their shirking is actually a civic vice.


  1. Thanks. Talk of an invisible hand has never been that far removed from older ideas about the role of providence in the social order. In fact, with American evangelicals, you shouldn’t even assume there is a distinction. For example, take this gospel classic:

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