The Six Minute Book Summary of In Cheap We Trust: The Story of a Misunderstood American Virtue by Lauren Weber (Part 1 of 2)
Executive Summary
The first half of In Cheap We Trust details the nation’s history of saving versus spending, beginning with America’s first colonists and ending with today’s society of consumers. The second half of Weber’s book ties America’s current economic problems into its effects on the environment, giving specific examples of what some people are doing to make a difference. The last chapter of the book investigates the psychology of being cheap.
The novel begins with a look into the lives of the Puritans. The Puritans were expected to uphold values of modesty and frugality, but the New World presented so much potential prosperity that it made self-denial difficult. They were constantly conflicted between their faith and the temptation to enjoy their wealth. Benjamin Franklin is often seen as the virtue of thrift personified. He believed that Americans should live within their means, saving for the future to ensure their independence and happiness. Other examples of famous savers and thrift advocates include Hetty Green, Thomas Eddy, the transcendentalists Henry David Thoreau and Ralph Waldo Emerson, Booker T. Washington, and John Henry Thiry.
American housewives of the nineteenth century underwent a gradual transformation from producing everything their families needed to buying more of what was needed. This change required that women learn how to spend and save. Lydia Maria Child, Sarah Josepha Hale, and Catherine and Harriet Beecher Stowe all wrote household manuals that guided women in their new lives as consumers.
The Jews and Chinese are the two groups in America most labeled as being thrifty and cheap. The author explains that even though these stereotypes have been around for centuries, they were only strengthened when the Jews and Chinese immigrated to America. Native-born Americans felt threatened by their success, fearing that their commercial skills and unusually low standards of living would lead to a loss of their own opportunities. As untrue as some of these stereotypes are, the Jews and Chinese did use their good understanding of money to become the most successful ethnic groups in the country. And just like other Americans, they’ve also strived for wealth and extravagance in addition to mere freedom and independence.
During World War I and World War II, the country’s leaders called on Americans to support their soldiers by saving. They knew that the increase in production and wages during wartime would tempt American consumers to spend. To finance the war and prevent Americans from using the raw materials needed for supplies, the federal government issued war bonds. This campaign for thrift kept Americans watching their finances and resulted in a stable economy. Unfortunately, this stability did not hold between the wars. After World War I, Americans became so optimistic about the Roaring Twenties economy that when the stock market plunged on Black Thursday, no one was prepared. Nothing would really lift the country out of the Depression until World War II. By the time the second war ended, economists realized they didn’t need to worry about another post-war depression. Americans had earned more, saved more, and were more eager than ever to spend. And when experts like John Maynard Keynes theorized that consumption drives a good economy, the American value system completely changed. It was no longer wise to save; a true patriot should go shopping. The country would take this pro-consumption view all the way to the new millennium, and few would question it until the 2001-2002 recession.
Economists have since said that consumption is overstated as the engine of economic growth. Saving is also key because investment spurs production, wage growth, and jobs. Oddly enough, the nation’s savings rate continues to decline while the reasons to save are only growing. With Social Security expected to decrease and medical costs expected to increase drastically in the future, the younger generations will need savings to support themselves during retirement. But Americans continue to spend. Weber presents several reasons why this may be the case, the primary ones being that money is too accessible and that opportunities are too great.
On the whole, Americans don’t realize how much the country’s consumer-driven society is directly harming the environment. Lauren Weber envisions an “eco-cheap” economy, an economy in which people consume less, reducing resource use and waste. In a truly “green” world, consumers take advantage of thrift stores and garage sales as a way to save valuable resources. However, there are some Americans who have discovered that “low-cost, low-impact living” saves money, helps the environment, and even leads to a higher quality of life. The author has actually met some of these people and shares their stories in her novel.
After studying the work of Sigmund Freud and some of today’s top behavioral economists, Lauren Weber tries to address her own question of why some people seem innately cheap. Once she finds a close enough answer, she then provides several reasons why being a “tightwad” is not necessarily a bad thing. Finally, Weber poses one last question: can adults learn to be frugal or is cheapness a trait that’s developed at a young age? Many writers are saying that thriftiness is completely learnable, and they’re offering tips to get people started.
The 10 Concrete Things Practicing Managers Should Take from this Book
Are your employees charging non-business related expenses on the company card?
Have a fire-and-brimstone preacher condemn them for their materialistic ways.
Trying to run a cost-efficient business?
Hang a scary portrait of Benjamin Franklin in the break-room.
Just because a potential hire is Jewish or Asian does not necessarily mean they will be excellent company accountants or financiers.
There’s just a high probability they’ll be excellent company accountants or financiers.
Employees still not watching costs closely enough?
Tell them there’s a war going on.
Consider going back to a traditional pension.
Nobody wants to work until the day they die.
Trying to encourage employees to keep their own personal savings?
Start a system that allows employees to have a fraction of their paychecks directly deposited into savings.
A cost-conscious business is often an eco-conscious business.
Unless you’re cutting corners in the wrong places.
Find a perfectly edible half-eaten tuna sandwich in the break room trash?
That’s just plain wasteful. Dive right in and get it.
If a potential employee admits to being cheap, there’s a chance they’re also highly organized and driven.
They might even be difficult, obstinate, and anal-retentive.
In this country, there is always at least one thing that will motivate any employee to do their job.
Whether they spend or save, Americans love money.
Full Summary of In Cheap We Trust
Ch. 1: “The Crowd Approved the Doctrine, and Immediately Practiced the Contrary”
Lauren Weber opens her first chapter with the story of how Benjamin Franklin came to write his 1758 edition of Poor Richard’s Almanack. In its preface, she notices one particular parable: a crowd of shoppers are waiting to get into a market when “Father Abraham” approaches them to give them useful advice. He asks them to pay attention to their “outgoes” as well as their incomes by saving money for the future. His final bit of advice is that everyone heed his advice, at which point “the crowd approved the doctrine, and immediately practiced the contrary, for the vendue opened, and they began to buy extravagantly.” The preface, also known as The Way to Wealth, became tremendously popular in America because everyone believed it was good, practical advice. Weber adds that Father Abraham’s best advice may have been the part about acting on it. The next portion of the chapter details the first Americans’ battles with spending. Puritanism, led by John Calvin, held deeply rooted values of modesty and frugality, which often conflicted with the Puritans’ temptation to prosper in the New World. In fact, Calvin’s followers found it almost impossible not to prosper, accumulating wealth that they were not allowed to enjoy. While preachers like Cotton Mather “bemoaned the turn to materialism”, many were growing tired of humble living and self-denial. Even the Quakers found these same virtues difficult to uphold in America. The last bit of the chapter is dedicated to the life of Benjamin Franklin, son of a candle-maker and one of seventeen children. Ben Franklin began his printing career apprenticing for his uncle’s paper, sometimes publishing some of his own writings under a different name. Soon he was running his own printing firm in Philadelphia, producing his own almanacs and newspapers. Franklin also developed an avid interest in science and civic affairs. Once he retired, living well off of his income, “he distinguished himself as a philosopher, statesman, and diplomat.” Throughout his life, Benjamin Franklin had always been concerned with America’s growing international trade economy, fearing that American spending on European products would steer savings away from investments at home and ultimately put their freedom at risk. Franklin felt that the development of an American middle-class would be what separated America from tyrannical European monarchies because it would mean fewer households in the extreme upper and lower classes. Unfortunately, though many Americans liked Franklin, they enjoyed international trade because it meant cheaper, higher-quality