We consumers can't get it right, living beyond our means during bubbles when we should be saving, and throttling back in downturns, putting each other and countless people overseas out of work. In January the award-winning British economic journalist Anatole Kaletsky even wrote a column with the ferocious headline "Punish Savers and Make Them Spend Money" -- and a Harvard counterpart, N. Gregory Mankiw, has recently made similar suggestions. (Mr. Kaletsky also proclaimed in April 2008 that if the Democrats were self-destructive enough to nominate him, "Obama would lose to McCain" in a "Greek tragedy" of "ineluctable doom.")
The paradox of thrift may have originated with John Maynard Keynes, but extreme saving, like the hypermiling that began even before the crisis, is an American specialty. In fact, extreme behavior of all kinds is both our glory and our potential downfall. As W. J. Rorabaugh wrote in The Alcoholic Republic: An American Tradition, we were the biggest drinkers on earth in the early nineteenth century, when distilled spirits were one of the few ways to move Western grain economically to Eastern markets before the railroads. Yet a hundred years after the whiskey boom, the Prohibition movement was gathering force and by 1919 had secured the Eighteenth Amendment. Americans got drunk together in communal bouts in the young Republic, so they had to sober up together in its maturity. We are the opposite of the ancient Greeks, with their motto "Nothing in Excess" inscribed on the temple of Apollo at Delphi.
The historian David Shi, author of The Simple Life: Plain Living and High Thinking in American Culture, found Americans turning to "therapeutic simplicity" well before the banking crisis. But in the end, even Amish communities increasingly depend on sales of craft and industrial products -- consumption -- to maintain their way of life. So we should also keep in mind the wisdom of one of our own oracles, Mae West: "Too much of a good thing can be wonderful."
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