David Brooks is one of the most thoughtful newspaper columnists. In a recent op-ed (?The Great Seduction,? New York Times, June 10, 2008, p. A 23), he argues that the founders of the nation ?built a moral structure around money. The Puritan legacy inhibited luxury and self-indulgence. Benjamin Franklin spread a practical gospel that emphasized hard work, temperance and frugality. For centuries, [the nation] remained industrious, ambitious and frugal.? But, Brooks continues, over the past 30 years much of that legacy ?has been shredded,? while ?the institutions that encourage debt and living for the moment have been strengthened.? And here he mentions ?an explosion of debt that inhibits social mobility and ruins lives,? because of ?people with little access to 401(k)?s or financial planning but plenty of access to payday lenders, credit cards and lottery agents.? Among other ?agents of destruction? are state lotteries??a tax on stupidity,? which tells people ?they don?t have to work to build for the future. They can strike it rich for nothing.?
Other culprits are the astronomical interest rates charged by payday lenders; and the aggressive marketing of credit cards by banks and other financial institutions, as a result of which by the time college students are in their senior year more than half of them have at least four different credit cards. The cures that Brooks offers include ?rais[ing] consciousness about debt,? encouraging foundations and churches to offer short-term loans in competition with payday lenders, strengthening usury laws, and taxing consumption rather than income, thus encouraging saving.
All this is very interesting, but is it correct? I have my doubts, except about the desirability of eliminating double taxation of savings, a problem with our income tax.
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