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“Uncle Sam to American's 'Wise Virgins': Drop Dead"

Mark W. Hendrickson
Award of Outstanding Merit - $1,000

Mark Hendrickson teaches economics at Grove City College where he is Fellow for Economic and Social Policy with the Center for Vision and Values. He is the author of Famous But Nameless: Lessons and Inspiration from the Bible’s Anonymous Characters. He also writes the “No Panaceas” blog on Forbes.com and is a Contributing Editor for the St. Croix Review and TheMoralLiberal.com.

The “wise virgins” in the title is a biblical allusion. It refers to Jesus’ parable of the ten virgins (Matthew 25:1-12). I gave illustrations of the present-day relevance of this parable in connection with various government bailouts several years ago, and the parable seems just as timely today.


As you may recall, in the parable, five of the maidens were wise, and five were foolish. The wise virgins behaved responsibly and prudently, making sure they had enough lamp oil for the anticipated midnight arrival of the bridegroom. The five foolish virgins, by contrast, had behaved irresponsibly and imprudently by neglecting to get oil for their lamps. As midnight drew near, the neglectful five asked their wiser sisters to share their oil. The wise virgins, concerned that dividing their supply would leave none of them with enough oil to keep their lamps lit for the duration of the ceremony, declined. Thus, the wise virgins, lamps aglow, were able to welcome and celebrate with the bridegroom while those who hadn’t planned ahead missed the joyous event.


The parable illustrates several facts of life (apart from its theological applications): 1) we reap the consequences of our choices, for good or ill; 2) we are responsible for our own success or failure; 3) it is better that some, rather than none, have enough.


In this folksy story, there was no redistribution of property from the prudent to the imprudent. The wise virgins weren’t held responsible for the failures of the foolish virgins. Each virgin got her just deserts. The prudent virgins were not considered greedy for declining to share their oil with the neglectful virgins.


Imagine how different the story would have been if there had been a law guaranteeing oil for all. A moral hazard would have been created. Assuming that their need for oil would be met, fewer would have planned ahead, and indeed, as often happens when governments guarantee supplies, a shortage would have ensued, much as guaranteed food from the common store led to starvation and cannibalism during the first years of the Jamestown settlement.


So, who are the wise virgins today? There are many possible answers to this question, but in the broadest and most fundamental economic terms, I would answer, “savers”—those who have deferred expenditures to provide a cushion against near-term and long-term financial uncertainties. The unwise would be those self-indulgent people who, though not needing to, spend all or more than all of their paychecks, resulting in zero or negative savings.


Apart from any personal benefits that savings confer, they have a great social benefit. Savings comprise the capital that is the key ingredient in economic production and today’s affluent standards of living. By contrast, non-savers or “dis-savers” (i.e., debtors, who are net consumers of social savings) can undermine overall prosperity. As the housing bubble and financial markets’ bust demonstrated so painfully several years ago, when it seems like almost everyone is borrowing from someone else, overall economic activity can contract severely.


Given the simple economic reality that savings are good and dis-savings often counterproductive, one would think that our society would respect and admire savers—the wise virgins—and that public policy would deal kindly with them. That clearly isn’t the case. On the contrary, savers are often disrespected, even abused. Examples abound.


Progressive politicians, citing “social justice,” repeatedly take the side of the unwise virgins, emphatically asserting that the latter have a “right” to a share of their wiser brethren’s property while denouncing the wise as “greedy” if they protest such a transfer of wealth. The message from the redistributionists on the left has been loud and clear and consistent: Don’t worry; when push comes to shove, the government will take care of you. Thus, millions of Americans have virtually no savings. They have fallen under the sway of moral hazard, counting on government to provide a safety net for them no matter how imprudently they manage their financial affairs.


Indeed, Social Security, which initially was supposed to supplement individual retirement savings, has become the primary, even the sole, source of retirement income for millions. What do you suppose will happen when Social Security’s underfunding poses a cash flow problem? Do you think Washington politicians will say, “Sorry, the program lacks funds, you’ll just have to get along on your own?” Not a chance. They’ll simply lay claim to the savings of the wise virgins. Don’t be surprised when liberals propose mandating that a certain percentage of assets in private retirement accounts must be invested in Treasury debt. This already has been done in places like Argentina, and if you think the American constitution will prevent the government from dictating what you must buy, remember that the Supreme Court’s Obamacare decision already has settled that issue against you.


You don’t have to wait for a future cash crunch to know that the powers that be in Washington are anti-saver. Savers have been getting ZIRPed for several years now, courtesy of the Fed, put in a position of extending interest-free credit to Uncle Sam while Uncle Sam uses the $85 billion that the Fed has been giving them every month to overspend with impunity (at least, until the piper comes to be paid, which it inevitably will).


Are you a younger American who diligently has saved up to make a down payment on your first house, only to have the bank decline your mortgage application while accepting one from a HUD, even though that applicant hasn’t saved for as large a down payment as yours? Sorry, you’re a wise virgin in a foolish virgin’s world.


This is more than just a political phenomenon. The bias against savers has permeated our culture. Take, for example, the way many colleges grant financial aid. You could have two demographically identical families who have earned equal dollars over the previous decade or two, one of which prudently saved for college while the other lived it up and accumulated negligible savings. Guess whose kid receives the financial aid? Yep, the kids of the big-spending parents.


These indeed are tough times for wise virgins. If that doesn’t change, it will end up being tough times for everybody.


Published in Forbes, August 29, 2013 (New York, NY)

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