How important are government policies and institutions in encouraging savings?
Very important. My book shows that people tend to save more when they are offered accessible, convenient and safe savings institutions. In the United States today, some 25 percent of lower-income households are “unbanked” — often because our banks charge them hefty fees and require high minimum balances.
What’s the relationship between policy initiatives and cultural attitudes?
While many love to talk about Japanese, Korean or German culture as being innately thrifty, I show how the various cultures of saving have been shaped and reshaped by states and institutions. “Moral suasion” campaigns, such as Americans and citizens of other countries experienced during the two World Wars, also have been influential in inculcating enduring habits of saving. Indeed, East Asian and European nations went beyond the United States in developing nationwide savings campaigns in peacetime as well.
The current economic situation in the United States and other countries puts into sharp relief the perils of “living beyond our means.” What would need to change for these dangers to be less severe in the future?
My book concludes with several policy recommendations. First, improving small savers’ access to banks. Second, encouraging banks to offer small savers’ accounts. Then, possibly reviving postal savings both to improve access and save the U.S. Postal Service, as well as promoting youth saving in schools and banks, and revising tax laws to encourage low- and middleincome individuals to build assets. Then, we need better regulation of predatory lending, and, finally, we need to promote universal access to savings accounts in terms of democracy and “financial inclusion.”
Sheldon Garon is Princeton’s Nissan Professor in Japanese Studies and professor of history and East Asian studies.
Princeton University Press, 2011