Beyond Our Means: Why America Spends While the World Saves by Sheldon Garon (review)

Beyond Our Means is a big book that is very engagingly written, and it deserves a wide general readership. It concerns modern international history in general, though it grows out of work in Japanese history. This book’s subject is also so vital, especially in the aftermath of the international debt bubble that began to deflate in 2007–8, that I offer this review as an invitation to further discussion more than as a conventional book review.

First, a brief review. Garon opens the book by noting recent criticisms by U.S. monetary authorities of Asian “oversaving.” This supposed Asian excess formed the counterpart of giant U.S. trade deficits. Thus, Federal Reserve Chairman Ben Bernanke in 2005 spoke of an international “saving glut” (at a time when U.S. household saving rates had fallen to historical lows), while his predecessor Alan Greenspan even blamed Asian savers for the U.S. housing bubble (pp. 2–3). Garon sees instead a U.S. problem, which badly needs fixing. His own investigation began as a study of savings promotion as social policy, and the narrow subject of the book is an international history of savings promotion since the nineteenth century—of “how nations molded cultures of saving” (p. 4). The wider question concerns popular thrift in general. Along the way, we also learn about the transnational exchange of knowledge and institutional practices—how “nations systematically surveyed each other” and sought to adopt “best practice” (p. 6). In Japan, of course, learning from other countries has attained a high degree of development; it is a bit of a lost art in the United States. Hence the need for this book.

Garon’s narrative begins with a wide-ranging account of the origins of modern saving practices in Europe in the nineteenth century, focused especially on ideologies and institutions. Britain had a pioneering role. Especially significant is the way that the British savings bank movement, designed to encourage saving by those of modest means, was intended both as social policy and as a support for the British state’s debt-financing system, in the deflationary aftermath of the Napoleonic Wars. Similar systems were quickly adopted by other European states (pp. 42–46). Japan’s savings history provides the main focus of four of the central chapters of this 12-chapter book; for specialists in Japan studies, these chapters could form a book in themselves. Garon traces this history from Tokugawa times to the present. In the Meiji era, Japanese institution builders adapted British and European practices and developed them into something new, as many readers of this journal will know from Garon’s previous work on the subject. The role of nonmarket savings institutions such as postal savings was especially important in Japan, as in other countries—this, too, is part of a transnational story of postal savings systems around the world.¹ America’s savings history is treated in equal detail. There are shorter accounts of the modern savings histories of several other countries in Europe and Asia. An invaluable part of the study comes in chapter 10, which surveys postwar South Korea, Singapore, Malaysia, and China. In all of these countries, governments adopted savings-promotion policies in highly conscious and sometimes authoritarian ways. The Japanese model is very conspicuous here.

The United States itself shows large internal regional differences and appears exceptional in various ways, even in the nineteenth century. But readers may be surprised to learn that U.S. saving rates remained at moderate levels into the 1970s—in fact, U.S. government statistics now show household saving rates to have peaked in the 1970s, at around 9 or 10 per cent of income (though at the time, according to the statistical methodology then in use, it appeared that household saving rates had fallen to 3 per cent [pp. 325, 341–42]). It would be important to know more about...