This past
Sunday “The
Way We Live Now,” a regular feature in the New York Times Magazine,
covered the effects of the increase in Americans’ inclination towards thrift in
these recent years: specifically the cycle of deleveraging, which is a
contraction of credit as individuals begin to spend and borrow less.

This is a
major change from the great increase in spending and borrowing during the years
and even decades prior to the start of the recession.  Ronald T. Wilcox’s Whatever
Happened to Thrift? Why Americans Don’t Save and What to Do About it responds
to this trend, which saw borrowed money exceed household income by 36% in 2008,
a number which has only dropped to 26% today, according to the Times Magazine. In the book, Wilcox
searches for the root causes of Americans’ aversion to saving, and offers
suggestions for promoting thrift amongst Americans.  Underlying these considerations is the idea
that household savings is a national, not personal, concern.

One might
wonder how what Wilcox addresses in his book plays a role in this deleveraging
economy, and how the ideas of Wilcox and Roger Lowenstein, the author of the
magazine piece, may or may not be compatible.
Writing
for Forbes last year, Wilcox describes
John Maynard Keynes’s “‘paradox of thrift,’” which suggests that while saving is
economically prudent on an individual level, the economy is negatively affected
when saving outweighs spending on a larger level.  However, Wilcox disagrees with the paradox’s
relevance to the current recession.
Spending, he says, both by consumers and through government stimulus,
would be unwise; the national household savings rate remains too low and must
first be improved further.  Lowenstein,
for his part, argues that government stimulus money would do little to change
this current deleveraging cycle.  Despite
the infrequency of these cycles, Lowenstein believes that they must run their
course.  With time purchasing and
spending will be reinvigorated, but in the meanwhile an influx of money from
the government won’t necessarily do anything to encourage its arrival.

No matter
what your views on this paradox, thrift, and this recession, Wilcox provides a
clear and readable understanding of how thrift is viewed in the United States
using a wide variety of approaches, and offers concrete suggestions for
increasing saving in America.  If you are
looking to understand more about American attitudes to finance and economics,
both in the eyes of average consumers and in the minds of experts, Wilcox, in
his examination of thrift, provides the ideal lens.