Does the United States have a faith-based economy? Absolutely.
It is not a matter of American exceptionalism. Every economy that has progressed beyond the hunter-gatherer stage is faith-based.
It is not really a matter of religion, either, although religious values certainly played a role in the success of capitalism. It is secular faith that supports economics, which is natural since economic activity has always seemed to be in some level of conflict with religion — from open warfare to concern about worldly values crowding out religious ones.
Calling our economy faith-based is jarring today only because the word “faith” was forcibly morphed and politicized. Vestiges of its old meaning remain today, though, in expressions still used in commerce, such as “full faith and credit” used to describe debt instruments, “good-faith effort,” used to describe a type of stock or bond underwriting, and “made in good faith,” used to describe promises included in contracts.
Our economy works because of three kinds of secular faith: faith in transactions; faith in institutions; and faith in the future. Each is a necessary condition for a successful economy, and each is suffering from the effects of erosion and of direct assault.
The most recent evidence of deterioration comes from a survey of how we assess our prospects in the future. A recent Rasmussen Reports telephone survey reveals that, “Just 14 percent of Americans expect today’s children to be better off than their parents.”
It is not surprising that this measurement is at an all-time low, and surely it would not be wrong to blame a good deal of our gloomy outlook on the Great Recession. Still, that is only part of the story.
The Rasmussen Reports study is an effort to discover people’s attitudes and opinions that will affect their future behavior. A different take on the Great Recession, by Ohio State University sociologist Zhenchao Qian, examined actions taken in the past and attempted to discover how those actions reflect economic changes.
Qian examined U.S. Census data and found that, “Evidently, living with parents reached a new high in 2007-2009 during the Great Recession, especially those aged 20 to 24.” By 2009, the data indicates that 43 percent of young adults in this age group were living in their parents’ home.
There is little doubt that the recession’s effects are fueling this change. Diminished job prospects, the punishing price of higher education and the high cost of housing, especially rental housing, are clearly major factors reshaping American households by adding young adults.
The backstory on this, however, is that young Americans living at home was a trend that began at least as early as the 1980s, long before the Great Recession. The rate of growth in this living arrangement over the past decade is not significantly different from what was in the 1980-90 period.
What that tells us is that the economic factors have been in place for decades and having measureable effects on living arrangements, family structure and Americans’ behavior and outlook on life.
When the Rasmussen survey and the Qian study are placed side by side, we can see a relationship between economics, attitude and faith in the future. It is a relationship that deserves our attention.
It would be foolish to ignore the effects of this recent recession, which cut so deep into our lives. It would be equally foolish, though, to assume that when we recover from the economic recession that we will recover our faith in the future, too.
It would also be foolish to ignore the institutional and transactional issues. The three secular faiths that make modern economies possible are closely interrelated.
Our faith in institutions has been eroding rapidly for nearly a half-century and has been diminished further by the depth and duration of this recession as well as government’s ineffective countermeasures. The federal government, for example, seems locked in a sort of time warp where its economic remedies range from 1930s Keynesian deficit spending to 1960s monetary expansion and zero interest rates.
There seems to be no comprehension in government that these policies are inadequate; no window the federal government can look out to see what is happening in the real world. We have to face the possibility that these old economic policy tools simply are not effective, at least not effective enough, when the economic change was significant enough to cause a loss of faith.
We also have to face the possibility that specific economic remedies may help, but the restoration of faith is more important. Without faith in our future, which is the very basis of savings and investment, parenting and education, our economy cannot function in a way that will support prosperity and growth.
James McCusker is a Bothell economist, educator and consultant.