The Worship of the Dollar

This blog, mainly concerned with cultural matters, has had little to say about the current financial crisis. I do feel, though, that it is the responsibility of all of us to learn what we can about investing, so we can protect ourselves and our families as much as possible. I therefore appreciate the efforts made by writers like Rick Darby and Ol’ Remus to grapple with the topic from their traditionalist perspective – not to mention The Economic Nationalist, whose blog has been added to the Links section. 

Mr. Darby has mentioned the book Bad Money by Kevin Phillips (2008) as a decent introduction to the subject. Phillips, a former Republican strategist, has evolved into a left-liberal who thinks the U.S. needs to work harder to be liked by its adversaries and that “radical Christianity” presents a grave danger to our national well-being, opinions which don’t incline me to trust his views about much else. In particular, I can’t take any analysis seriously that doesn’t take mass immigration into the picture. However, Phillips does seem to be one of the earlier people to point out the problem of the “financialization” of our economy. This is a useful concept, because it expresses something ordinary Americans understand but that has been obscured in the mind of “conservatives” for the last few decades: that having a strong “economy” ultimately means producing things of value. Finance is important, but only insofar as it facilitates real, productive activity. 

[The term] Bad Money … is not intended to evoke nineteenth-century robber barons, twentieth-century salad oil swindlers, or twenty-first-century Enron architects. For now, that is too parochial. The reason for applying a negative characterization is historical and institutional, with a deep bow to the inherent vulnerability of human nature exposed to pecuniary temptation, witnessed today on an unprecedented scale. Money is “bad,” in the historical sense, when a leading world economic power passing its zenith – before the United States, think Hapsburg Spain, the maritime Dutch Republic, (when New York was Amsterdam), and imperial Britain just before World War I – lets itself luxuriate in finance at the expense of harvesting, manufacturing, or transporting things. Doing so has marked each nation’s global decline. To institutionalize the dominance of minimally regulated finance at this stage of U.S. history is a bad idea. (p. 20) 

For decades, ordinary Americans in places like Michigan have agonized over the loss of the manufacturing jobs that provided a livelihood to so many families. They did more than that: they delivered quality products made by Americans TO Americans. During these decades, it was more often than not the liberals who called for protection of American jobs, while the “conservatives,” scoffing at this, assured us that our “economy” was fine.

I confess to having bought into this mindset in my libertarian days. Wasn’t American greatness rooted in American capitalism? Well, yes, partially. A system of free enterprise enables men of vision, motivated by profit, to create world-changing technologies. But when profit becomes an end in itself, we are in trouble. 

Consider housing, one of the current trouble spots in our economy. In the last decade I have lived in and shopped for apartments, condos, and houses. But nobody builds nice houses anymore. Apartments are little more than boxes for people to live in. When you move in they all have identical white walls and beige carpets. When you start making more money you can move into a nicer place with some trees or a pond outside; with more closet space; with another bath. Buy a condo and you get wooden floors, nice tiles, an actual garden of your own. And so forth…but there are no nice houses! All you are paying for are features, each feature carefully priced by corporate formulas, including the “intangibles” like the quality of your neighbors. The more you pay, the more features you get. But there is no house. One thing rarely noted in all the discussion of the housing bubble is how ugly all the new houses are. Is this coincidental? Of course not. 

Consider the various ways life has become less convenient in recent years. Food and fuel prices rising. Airports crowded and unpleasant. Banks charging whatever arbitrary fees they can get away with. And we citizens become numb to being gently abused by our government and business, who continue to claim that things are getting better and better. 

The real source of the problem is spiritual. And the gap between business leaders and ordinary people mirrors the gap between our politicians and ordinary people: both pursue abstracted, “rational” goals which are unconnected to any sense of the real people they are supposed to be serving. They are greedy, yes, and they are wicked; but it is not ordinary greed. Rather, in their liberal worldview, they are helping other people.

Just not their own countrymen.

A few weeks ago, one of my readers mentioned Edwin Arlington Robinson as a favorite poet. He has a wonderful poem dealing with the worship of the Dollar. Things have changed profoundly since 1916, when the poem was written (for one thing, the dollar coins he alludes to were made of gold!), but the spiritual emptiness he perceived then was the same as that which afflicts us today. 


     I HEARD one who said: “Verily,
     What word have I for children here?
     Your Dollar is your only Word,
     The wrath of it your only fear.

     “You build it altars tall enough
     To make you see, but you are blind;
     You cannot leave it long enough
     To look before you or behind.

     “When Reason beckons you to pause,
     You laugh and say that you know best;
     But what it is you know, you keep
     As dark as ingots in a chest.

     “You laugh and answer, ‘We are young;
     O leave us now, and let us grow.’—
     Not asking how much more of this
     Will Time endure or Fate bestow.

     “Because a few complacent years
     Have made your peril of your pride,
     Think you that you are to go on
     Forever pampered and untried?

     “What lost eclipse of history,
     What bivouac of the marching stars,
     Has given the sign for you to see
     Millenniums and last great wars?

     “What unrecorded overthrow
     Of all the world has ever known,
     Or ever been, has made itself
     So plain to you, and you alone?

     “Your Dollar, Dove and Eagle make
     A Trinity that even you
     Rate higher than you rate yourselves;
     It pays, it flatters, and it’s new.

     “And though your very flesh and blood
     Be what your Eagle eats and drinks,
     You’ll praise him for the best of birds,
     Not knowing what the Eagle thinks.

     “The power is yours, but not the sight;
     You see not upon what you tread;
     You have the ages for your guide,
     But not the wisdom to be led.

     “Think you to tread forever down
     The merciless old verities?
     And are you never to have eyes
     To see the world for what it is?

     “Are you to pay for what you have
     With all you are?”— No other word
     We caught, but with a laughing crowd 
     Moved on. None heeded, and few heard.


7 Responses to The Worship of the Dollar

  1. Terry Morris says:

    You wrote:

    “The real source of the problem is spiritual.”

    Amen, brother! That pretty well sums it up.

  2. Art says:

    There are so many errors in this post that it would take quite a lot of time to address them all. I will, however, briefly comment on the statement that, “… something ordinary Americans understand but that has been obscured in the mind of “conservatives” for the last few decades: that having a strong “economy” ultimately means producing things of value.”

    Americans produce more “things of value” today than at any time in our history, it’s just that we produce these things with fewer workers because of increases in productivity.

    Here is a post from Mark Perry’s “Carpe Diem” blog:

    “Not only are American manufacturing workers probably the most productive in the world, they keep gaining on workers in other countries.

    … the U.S. gain of 4.1% in just one year was higher than the productivity gains in all countries except for Taiwan, Korea and Germany.

    Over a longer period of time (1979-2007), American manufacturing workers had higher average annual gains in productivity (3.9%) than all countries except for Taiwan and Sweden during that period.”

    “Bottom Line: One of the reasons that there are 6 million fewer U.S. manufacturing jobs today (13.428 million) than in 1979 (19.553 million), an average annual decline of 1.2%, is that American workers have become 4% more productive each and every year.”

    Compare these to graphs from the St. Louis Fed:

    Manufacturing Employment:


    Manufacturing Output:

    During the 18th and 19th centuries almost all Americans ( upwards of 80 percent) worked on a farm, today it is closer to 3 percent and they produce far more than that 80 percent could ever have dreamed of. This increase in farm productivity resulted in the massive loss of farming jobs freeing up Americans to work at other things, like manufacturing. This shift, while disruptive to some, resulted in a huge increase in the wealth of the nation and it’s populace. The same thing is happening today, only with the manufacturing sector.

  3. stephenhopewell says:

    Art, I appreciate your providing these sources. I would like to know what you think of the concept of “financialization” of the economy, which was my main concern here. As for manufacturing, I didn’t mean to say that manufacturing jobs should be kept for the workers’ sake if technology has made fewer workers needed – though I do think a healthy society would continue to provide work for that sector of the population that is best off doing manual or relatively unskilled labor. The idea that the entire population of the United States has to learn computer and finance skills because we have outsourced much of our manufacturing is absurd.

    I am also commenting on a general decline of quality we see both in manufacturing (the plastic made-in-China items in Wal-Mart need no comment, but it’s true of domestic products too) and housing. Obviously, technological innovation continues to speed along, and products such as automobiles (and above all, computers) are greatly superior in some respects to the products of the past. But even with, say, cars, there is a loss of a sense of style and craftsmanship, and this does affect quality of life.

    Anyway, I’ll read the sources you provided, especially the Carpe Diem blog, which looks informative and is also from Michigan!

  4. Art says:

    “… a leading world economic power passing its zenith – before the United States, think Hapsburg Spain, the maritime Dutch Republic, (when New York was Amsterdam), and imperial Britain just before World War I – lets itself luxuriate in finance at the expense of harvesting, manufacturing, or transporting things. Doing so has marked each nation’s global decline.”

    First, I don’t buy for a minute that the US is “passing it’s zenith” or that we are “luxuriating in finance at the expense of harvesting, manufacturing or transporting things”. I do believe that there are many enemies of capitalism, global trade and free markets who seek to exploit the natural insecurities many of us feel, when confronted with economic change, in order to win support for a more elitist and socialist order.

    Modern finance has largely been about the efficient allocation of capital and the diversification of risk. It has done a good job of mitigating the severity of economic downturns for the last couple of decades. Our recent problems stem more from poor government regulation (CRA), perverse tax policy and the desire, on the part of liberals, to use the coercive power of government to redistribute wealth. In essence, the government turned the balance sheets of Fannie and Freddie, along with many other financial institutions, into a massive, taxpayer guaranteed social program aimed at providing minority housing. Once the game was forced on them, financial institutions and market players naturally looked for every opportunity to profit, that is what human beings do.

    Capitalism generates an incredible amount of wealth, it also creates excess. That excess, usually the result of government incompetence, needs to be periodically wrung out of the system. This idea, that because markets do not go up perpetually the system must somehow be broken, is nonsense.

    As for the argument that quality has suffered as the result of trade and mass production, If you may mean craftsmanship, that may be true to some extent. I would argue that a certain amount of craftsmanship has been sacrificed for availability. Trade has made a wide variety of goods available to those who might otherwise be unable to afford them. This is, I would argue, a good thing as it raises peoples standard of living. Manufacturers respond to market inputs, if their products aren’t selling because they are perceived as being of low quality they leave themselves open to competition. This is how Japanese auto companies wrested market share from the Big 3. The simple truth is that the quality of most goods improves over time, even as the price declines.

    You may want to watch this:

    What we should be worried about is the incredible costs of the modern welfare state. Unfunded state, local and federal pension obligations, social security and medicare will, if unaddressed, saddle the taxpayers of this country with a staggering tax burden resulting in financial dislocation and a reduction in our standard of living. There is no such thing as a free lunch.

  5. stephenhopewell says:


    You provide good evidence that US manufacturing is increasingly productive on a per capita as well as an absolute basis. I have no reason to doubt that, and I regret my phrasing which suggested that we aren’t producing “things of value” as we used to.

    I largely agree with what you say in paragraphs 3 and 4, except I don’t think the financial institutions and market players are any more innocent than the government in this business.

    I nevertheless am concerned with the reversal of the positions of finance and manufacturing in their share of the GDP, which suggests to me we are losing our self-sufficiency and a healthy economic diversity. I will need to do some more research on this before writing about it, though. Thank you for the useful links.

    Other problems related to globalization, especially those caused by mass immigration and outsourcing, may be difficult to measure in economic terms, but are key concerns of this blog. People who feel uneasy about becoming a white minority, or the U.S. becoming a Hispanic/bilingual country, or about having most of our goods made in China, are right to be concerned, though the economic figures by themselves may tell us everything is great. In that sense I am giving a nod to old-fashioned blue-collar protectionism, and to old-fashioned condemnations of greed and hubris like Robinson’s, though not advocating liberal or socialist solutions in any sense.

  6. For me to join a chorus to shout Art down here would be ungallant. His perspective remains the dominant perspective among right-wingers in the United States today, and he does us the courtesy of expressing the perspective forthrightly here. Like you, I very much used to agree with him.

    Obviously, today I think Art mistaken. However, Art is entirely right that U.S. manufacturing outputs more than it ever has, using less labor. I will go further to make a point in Art’s defense: the Crash of 2008 seems to have little to do with America’s manufacturing woes, for, if it had, then the U.S. dollar would have tanked.

    I am not sure that Art perceives the whole picture, however. The U.S. has always been a trading nation, but she used to be largely self-sufficient, filling her treasury not by income taxes but by excise taxes and a tariff. Free-traders told us in the 1970s that the U.S. would never lose her manufacturing dominance. In the 1980s, the argument became that the U.S. would lead in the production of complex, heavy, capital-intensive goods. In the 1990s, the U.S. would lead in specialty goods, purpose-made machinery and so forth. As the 21st century dawned, we would lead in innovation and information. Now we are told that none of this really matters, because U.S. manufacturing output is up.

    Well, to the extent that U.S. manufacturing output actually is up, this is a good thing not a bad, but Art ought to know that something is amiss. Why is it that our defense systems now require imported parts to function? Why does just about everything we buy seem to be made in China? Why are we continually told that we cannot tolerate financial and political crises in disant lands because of the threat they pose to our interconnected economy? Now, I know the usual, theoretical answers to such questions as well as you do: Ricardo’s law of comparative advantage and all that. (There is also Bastiat’s tired, ahistorical canard—the quote is from memory—that “Where goods do not cross borders, armies will.” Bastiat would have been surprised by the U.S. Civil War, WWII in the Pacific, WWII in Asia, and Operation Barbarossa. But Art to his credit did not bring this up.) Something however is pretty obviously not right in our economy today. One does not need to pretend counterfactually that manufacturing output were down to sense that things are not going all right. Do we Americans really have to follow this track all the way to the precipice before we will leaven our view of manufacturing and trade with a little common sense?

    Art can click on my name above for an archive of commentary and analysis that explores the topic further, if he is inclined to do so.


  7. stephenhopewell says:


    Thank you for your comments. I for one plan to work through your archives.

    That’s where I’m starting, looking at what seems wrong and trying to figure out why it’s so. I appreciate the civil and high quality comments from you both.


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