Patriotism and Personal Finance - A Brief Walk Through American History
To all the Americans out there, happy Independence Day! I think this a great day to reflect upon how personal finance and patriotism is so intertwined in America. So I dug up a few tidbits from American history and summarized them here.
"No taxation without representation" is an iconic slogan that points to one of the main reasons why the American colonists sought independence from Britain more than 200 years ago. Simply put, the Americans were angry that their personal incomes was being taken without their consent. The first direct British tax on American colonists was spelt out in the Stamp Act of 1765, a law that required every newspaper, pamphlet, and other legal documents to have a British stamp upon it. Since the stamp costs money, it sparked outrage amongst the Americans because they had no need for this stamp and they did not want to pay for it. The Stamp Act was repealed in 1766, but the later Townshend Acts imposed more taxes on many other goods, including tea. These new taxes led to more unrest amongst the colonists and British troops being sent to America. Eventually, the anger over the taxes led to the Boston Tea Party, and in response to this unrest the British Empire passed the Intolerable Acts which spurred the growth of the American Revolution and eventually led to the Revolutionary War. With this history, it can be argued that the American Revolution was all about the freedom of personal finances. The Americans wanted the freedom to spend their own money how they wanted, and do business without being unjustly taxed.
The Great Depression
The Social Security Administration was formed in the midst of The Great Depression by Franklin D. Roosevelt. In a famous speech now known as "The Four Freedoms" speech , he said this, "I have called for personal sacrifice, and I am assured of the willingness of almost all Americans to respond to that call. A part of the sacrifice means the payment of more money in taxes. No person should try, or be allowed to get rich out of the program, and the principle of tax payments in accordance with ability to pay should be constantly before our eyes to guide our legislation... If the Congress maintains these principles the voters, putting patriotism ahead pocketbooks, will give you their applause." The basic message was that if people did not want to participate in the Social Security program they would be unpatriotic. Roosevelt also outlawed the ownership of gold by private citizens except in jewelry, and basically allowed banks to print as many bank notes as they want without having to redeem it for gold.
World War II
During World War II, the general message was for Americans to be frugal with their money and support the war effort. A Disney propaganda cartoon called "The Spirit of '43" showed the good side as a thrifty and hardworking Donald Duck who paid his taxes, and the film explained that if you did not pay your taxes a good soldier out there would die. The propaganda message was that if you spent your money you would be helping the Axis powers and if you saved your money for taxes you would be helping your country. Many war bonds posters were also made to encourage people to invest in the war effort. In the present day, many of these colorful posters have become collectibles.
After World War II, consumerism somehow became synonymous with patriotism in America. Americans are systematically encouraged to spend their money. In the fifties and throughout the era of the Cold War Americans were told to spend in order to be as different from communists as possible. After the Cold War, consumerism is already a big part of America's GDP. After the September 11 attacks in New York, the country slid into a recession and many companies created ads that linked spending money to helping America. Additionally, the Federal Reserve made it cheap to borrow money to encourage spending. Recently, homeownership was also touted as a way to fight terrorism and keep our country secure. This year, nearly every tax paying American is receiving a "stimulus check" that they are expected to spend to give a boost to the economy. President Bush said in a speech in February that "the purpose is to encourage our consumers. The purpose is to give them money …Consumerism is a significant part of our GDP growth, and we want to sustain the American consumer, encourage the American consumer…". The dominant message out there is that if you want to help your country, you must take out your pocketbooks and spend like there is no tomorrow.
I realize that this is a extremely abbreviated collection of American history, but I think it is interesting how the idea of patriotism affects the personal financial decisions of Americans. There is also a stark contrast to how taxes is viewed in the different eras of American history. At first it was a sign of oppression, but eventually it became a symbol of power, freedom, and patriotism. I feel that the current state of promoting rampant consumerism as patriotism is a bit irrational, but I guess propaganda always appeal to the emotion and not reason.
I know that some Americans also show patriotism by only purchasing items made in America, or refuse to travel abroad. Do you show your patriotism with your pocketbook? If so, how do you go about it?
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