Protestant Ethic and the Spirit of Stimuli

Many of my conservative and libertarian friends do not want to see stimulus plans, bailouts, subsidies, etc. You are not alone. I happen to be of the persuasion that less government intervention in the markets is a good thing, a preferred thing, the best thing. But, we've come thus far and we've lost so much money and so many jobs and so we must accept that a stimulus plan is coming. I'm not saying that this is the best course of action, but it will be the course of action. What I'm trying to articulate is WHAT I want to see the stimulus plan doing/encouraging.

In a seemingly irrational and unrelated move, I'm going to direct you all to look at the essays of Max Weber. The Protestant Ethic and the Spirit of Capitalism was a book/series of essays that was compiled after extensive study of political, industrial, economic, and religious history of the world (Western Europe in particular, as this is clearly the focus of the book).

If I may paraphrase my Professor... Weber argued that the Protestant ethic was a NECESSARY condition for the creation of capitalism. Granted, Protestant ethic was not the ONLY condition. Before capitalism could emerge, transportation and communication needed to be made more expedient. However, Weber says that without this Protestant (Puritan/Calvinist) work ethic, capitalism could not have started.

We could spend all day debating his theory. It is a very interesting and convincing piece of literature. Weber was an extremely well-read and intelligent man and he makes a strong case. For my purposes, I will assume that his theory bares significant truth.

The Puritans believed, contrary to many other sects of Christianity, that worldy activities were not devoid of spiritual purpose. The Puritans believed that man was called to a profession by God. They believed that by pursuing their calling (berufsmaβig), they were doing the will of God. They believed that work was salvific and that by being successful in their calling, God was indicating that they would acheive salvation.

This next part is absolutely essential to the point I'm trying to make.... Puritans believed that they must work tremendously hard to achieve salvation while simultaneously abstaining from SPONTANEOUS PLEASURE SEEKING. Capitalism was able to emerge because Puritans believed that saving and reinvesting back into their work was the only proper way to spend their money.

"A penny saved is a penny earned" - Benjamin Franklin. This quote exemplifies Franklin's (and many other Puritans') belief in saving over spending and consuming.

Many argue that Protestant ethic was essential for the founding of capitalism but not it's survival. However, it is crucial to note that without the hardened and (in this case) redemptive philosophy of the importance of PRODUCING AND SAVING, capitalism would not have existed.

We can look around the United States and see that the Protestant ethics of hard work, saving, and reinvesting into that work are almost vanished. The US government and its citizens are ardently subscribed to the idea that an economy based on borrowing and spending is viable. This is a fallacy.

Artificially rising home prices allowed many people to believe in this fairy tale. They believed that they could keep borrowing against their house, investing into their house, spending money on furnishings and new cars and new clothes and still stay strong economically because of the ever-increasing value of their home. But, in 2008, this philosophy proved itself to be a formula for disaster.

Americans gave out and took on billions of dollars of loans so that they could spend. US citizens, under Bush and Clinton, were inundated with the idea that spending money on goods was a good thing for the economy. People thought they were doing their country a service by buying things that they couldn't always afford. This is because we thought that an economy based on consumption could work. An unbelievable 70% of GDP is made up of consumption. Americans spend more money than they earn.

In direct contrast to the Puritans, spontaneous enjoyment of goods is now EXPECTED in the United States. It is no longer a virtue to save, to grow your business, to work hard. These things can be bypassed so quickly by filling out a loan application. However, look at where these things have gotten us: need I point to the financial bailout (covered in my previous blog) and impending $825 billion stimulus plan?

That being said, there needs to be a significant and substantive change in the makeup of our economy. My free market friends argue that these changes can be made painfully through the economy's built in self recovery mechanism. I agree with them. However, that process is long and painful. Although I agree that it is in many ways the best course of action, hundreds of millions of Americans are demanding immediate action from their government. There will be a stimulus, that I guarantee. There will be negotiating over the size, makeup, and timing of the plan. But, it will happen.

Americans, in place of God and salvation, must see producing and spending as the spirtitual craft that makes retirement (salvation) and the prosperity of the United States economy (the glory of God) possible. I'm asking you to take God out of the equation. Retirement is the end, the place where all worldly work pays off. The prosperity of the country is different reward, a patriotic congratulations for hard work. Some may not care about this. That is fine too. But as Americans we should feel, at least in some part, a dutifulness to achieve this end. I want the stimulus plan to encourage this by doing (or not doing) the following things.

THIS IS WHAT I DON'T WANT TO SEE:

I don't want to see the Federal Reserve continuing to lower interest rates so as to encourage lending. Americans are broke. We don't need to buy more things that we can't afford. This is monetary policy, but it is and will likely continue to be a part of the recovery plan. I would rather see them pull a Volcker (which would make Obama's ratings plummet and send the country into an even bigger temporary recession, but would, I think, help the country fix its debt problem). Encouragingly, Volcker is the leader of the newly-formed Economic Recovery Advisory Board.

I don't want to see the Obama team cutting checks and making tax cuts for individuals (honestly, lol to proposed tax cuts for people who don't make enough money to even pay taxes). All they will do with the money is pay off some of their debt or continue to buy products they don't need (which will, in all likelihood, be from foreign producers anyways).

THIS IS WHAT I WOULD LIKE TO SEE:

As a rule, the things that I want to see are things that will create jobs. Not jobs working for the government because the last thing we need is expanded government. Expanded government in no way helps to produce anything. The size and scope of government is big enough already.

I'm encouraged that the Obama plan is all about job creation. However, I'm slightly discouraged that he talks about doing this through government works projects. New roads and bridges are nice, but they only temporarily employ people and don't provide much in terms of economic growth.

I want to see small business tax cuts. You want to employ people? Then give tax cuts to the people whose business it is to employ people. It's not the government's job to employ people. By giving large tax cuts to small businesses, the government encourages growth, innovation and competition among firms. This is great especially as some of these small business are in new or underdeveloped technology that could be the future of the American economy.

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The United States neeeeeeeds to be in the business of production again. This stimulus needs to say, "enough borrowing and spending". The government needs to provide capital to businesses who will use it to produce things, employ people, and then reinvest in their company and expand. THIS is the Protestant work ethic that has been missing. This is the work ethic that I would like to see make a significant comeback in a more secular form.

The stimulus plan is, in itself, a total contradiction for what I want. I want people to see that borrowing and spending is not a feasible means for survival or prosperity. Seeing the government borrow and spend to promote ideals of producing and saving is quite hypocritical and borderline preposterous. However, THE GOVERNMENT NEEDS TO COMMUNICATE THAT THIS IS A ONCE IN A MILLION YEARS KIND OF PLAN. Government is not a safety net. It cannot employ people. It cannot distort market forces. It cannot encourage its citizens to live above their means. This needs to be a one and done deal. Government cannot reach back into our pockets, back to the printing presses to provide more money. We are broke, as a nation and as a people. This injection of capital needs to be to get things going again; it needs to be a spark. People have to see this plan as A SIGN THAT OUR BRAND OF ECONOMY HAS FAILED. We cannot continue to borrow and spend. We must go back to producing and saving.