The return of thrift

While debate rages in Washington over dismantling welfare, few realize that the "welfare state" properly understood encompasses much more than aid to the poor. There is a vast and hidden "middle class welfare state" in this country, which provides comfort and security for tens of millions of Americans in the form of home mortgage deductions, Medicare, Social Security, veterans' benefits, and well-paid government and military jobs. But as Phil Longman demonstrates, it is precisely this huge entitlement infrastructure that is the source of our most serious long-term economic problems. As the Baby Boom generation ages, public and private pension systems will be taxed to their limits, government spending will spiral out of control, and health care will be priced as a luxury good. The implications for the average American can be expressed by one shocking and easily grasped fact: To make up for Social Security and Medicare benefits that will never materialize, the typical 35-year-old today earning $35,000 should be saving over $550 each month, equal to 20% of his income - or should look forward to a sharp drop in his living standards after retirement. In The Return of Thrift, prize-winning journalist Phillip Longman exposes the outrageous growth of middle class giveaways, and how it has coincided with a dramatic decline of American values - simple yet important ideals like thrift, family, work, and citizenship. As conservatives have argued, not only do entitlements bankrupt the government, they remove the incentives for family and individual responsibility. The culture of entitlement bred by this subsidized economy has taken on a life of its own, to the point where many Americans feel free to rail against "welfare mothers" and foreign aid, while enjoying their own substantial perks and turning a blind eye to the coming fiscal catastrophe. Political pundits endlessly debate whether the economy or "values" is the most salient issue to voters; the 1996 election is largely seen as a referendum on these competing views of American politics. But Longman shows that this dichotomy is false and misleading: In the end, bad values make for bad economic choices, and only the spectre of imminent economic privation can produce a restoration of the middle class ethic. Going well beyond those who, like William Bennett, merely exhort their fellow citizens to virtue, Longman shows how greater individual responsibility will grow out of economic necessity, as it did during the Great Depression. Thus, despite his bleak projections, Longman remains an optimist and concludes with insightful and detailed advice about how we can ameliorate the worst symptoms of the coming collapse.