American Aspiration – a Blueprint

The current U.S. budget deficit trajectory and tariff-centric economic policy have raised concerns about economic stagnation (and worse) among business leaders and policymakers. And with good reason: an often-cited study of tariffs in 151 countries over fifty years showed that tariff increases consistently predicted significant declines in output and labor productivity five years later, and warnings about the stagnating effects of growing government deficits are plentiful.

Stagnation is not just detrimental to businesses trying to grow and acquire new customers. It is bad for wages, job quality, job availability, and job satisfaction. In other words, it is bad for people who work or want to work.

But stagnation is worse than that. At its most fundamental level, stagnation deprives people of some of the most important elements of a fulfilling life: self-improvement, fulfilling your potential, pursuing your dreams. Most public debates about dynamism, stagnation, and economic growth occur within the parameters of economic variables, including rates of new business creation, wage trends, unemployment rates, and innovation trends. But it is also important to include the distinctively human element in these debates – what do economic and social phenomena do to people’s aspirations?

The Moral and Aspirational Heart of Economics

As the disciplines we now call economics and sociology were being invented in eighteenth century Britain, writers and philosophers were preoccupied with these sorts of questions. The role of human habits, virtues, and ambitions were central to their economic inquiries, not just subjects within strictly moral philosophy. The idea that personal improvement was possible through one’s profession began to take root as a crucial foundation for economic thinking. Following their example, we should also be asking: which kinds of personal characteristics does a growing commercial society require, and conversely, what kinds of personal characteristics does an ever increasing commercial society produce or encourage?

In the first essay in this series, I highlighted how human agency, combined with an appetite for adventure and creativity, yields collective benefits in a dynamic society. In this essay, we will broaden the topic and look at what we know about the kinds of aspirational habits that a dynamic society requires. In other words, if we accept that having more people in more places making, building, and creating more good things is a net positive for society (e.g., more new companies, more new jobs, more personal fulfillment), what kinds of characteristics should we expect to see in those people?

The father of modern economic theory, Adam Smith, observed in The Wealth of Nations that merchants in Britain were better property developers than the landed gentry because of the habits they formed in the daily pursuit of profit through trade and product development. They were “more spirited” than landed aristocrats, and their “habits…of order, economy, and attention” make them “much fitter to execute, with profit and success, any project or improvement.”

Smith explored the sociological origins of this dynamic in his earlier Theory of Moral Sentiments. Because people of “inferior rank” do not have the luxury of distinguishing themselves in matters of taste and refinement (think of elites you know discussing wine or the theater), they must advance in the world through “superior knowledge in [their] profession, and superior industry in the exercise of it.”

They “must be patient in labour, resolute in danger, and firm in distress.” They are characterized by a “continual and long exertion of patience, industry, fortitude, and application of thought” that Smith says were unknown among those born into the aristocratic classes of his day.  

Similar eighteenth century treatments of the virtues of commerce can be found in Lord Kames, David Hume, Adam Ferguson, and other proto-economists and sociologists of their day. They were preoccupied with how commercial society relied on or cultivated a variety of human habits such as industriousness, imagination, strategizing, and striving. They were not uninterested in the classical virtues but preferred to focus on other modern virtues that became possible once self-improvement understood as vocational fulfillment and material progress became possible for ordinary people.

Understanding this effect of commerce on human behavior should be our starting point in economic analysis, but it usually isn’t. How often do you hear political leaders wonder aloud how a tariff, trade, or tax policy proposal will affect the character and motivations of young, aspiring workers?

Essential Traits in an Aspirational Economy

We would do well to recover the eighteenth century sensibility on these matters. Contemporary social science essentially urges us to do so, in fact. Studies in social psychology and economics have found that various types of aspirational behavior and commercial life are positively intertwined, providing modern-day affirmation of the observations made by Smith and his contemporaries.

By studying individuals who strive in various ways – such as entrepreneurs, those who relocate geographically in pursuit of opportunities, college students seeking success, and so on – we can gain a deeper understanding of the habits and virtues that help our aspirations find fulfillment in the pursuit of opportunity. These behaviors are as much or more environmental than inherited, meaning they can be encouraged, discouraged, increased, or diminished. We should therefore reconsider education and policymaking with them in mind.

Six cross-cutting characteristics stand out that should serve as good guideposts for policymakers, educators, and parents who influence the aspirational lives of others. These are not the only ones, but they are a good starting point.

Exploratory mindset

The first trait is an exploratory mindset, which can be thought of as an innate urge to learn and gather information, regardless of where it leads. Psychologists have found that some people learn how to take advantage of the dopamine hit we get when we learn something new, even – and perhaps especially – if what we have learned challenges our prior beliefs. Its opposite is the self-satisfaction and sense of security that comes from living life as though all questions are settled. People with exploratory mindsets have developed a learning muscle that always needs to be exercised, which makes curiosity about why things happen and how things work a common feature of their lives. This correlates with success at work, inventiveness, and entrepreneurial thinking.

Openness

The second trait, openness, is related to an exploratory mindset. As one of the Big Five personality traits, it manifests as a willingness to try new things and be experimental in problem-solving. Openness for its own sake has both benefits and detriments (an overly experimental person can get into a lot of trouble), but it becomes especially important in ambiguous and uncertain circumstances, in which studies have shown it correlates with creativity. One of the likely reasons immigrants start businesses at a higher rate than the native population is that, according to one study, openness, combined with personal agency in uncertain environments, fosters creativity and inventiveness and reduces one’s concern with predictability and stability.

Embracing challenge

The capacity to embrace challenges rather than opting for the easy path is a crucial third trait. Studies have found that challenging coursework predicts success among students and that students who believe they can grow more intelligent and successful through hard work do better academically than those who their intelligence is fixed, no matter how hard they work. Exposing students to research demonstrating that they can enhance their ability through hard work and effective learning habits has been shown to improve the outcomes of first-generation college students and reduce inequality among specific socioeconomic groups by increasing their retention rates after one year. The “coddling of the American mind,” as Greg Lukianoff and Jonathan Haidt have shown, can lead to disastrous consequences at both individual and societal levels. Trophy cultures are more likely to lead to stagnation than dynamism.

Conscientiousness

Of the Big Five personality traits, conscientiousness matters a great deal to a person’s professional advancement. It correlates with business ownership more than the other four Big Five traits, and together with “fluid intelligence” (the ability to solve novel problems and think creatively), it is one of the best predictors of student success in school. Conscientiousness is a blend of goal-orientation, diligence, and reliability. Conscientious people “look around the curve” and anticipate issues before they arise. They hear the concern behind a question, not just the question itself.

Social capital – weak ties

One of the most counterintuitive findings in research on social capital is that it is not your close friends and family who open doors to the biggest opportunities for you, but those connections and relationships that are less personal. People who cultivate a wide range of these “weak ties” create for themselves a kind of relational ecosystem on which to draw when starting something new, seeking a new job, or seeking advice on charting a new path. It turns out that “who you know” really does matter, but not in the way that most people think. Learning how to build and maintain healthy relationships is crucial for long-term happiness and success.

Non-pecuniary motivation

Every entrepreneur and business owner must think about money more than the rest of us do because making payroll and poring over expenses and P&L statements have a way of putting money at the front of your mind. Surveys of entrepreneurs reveal that making a lot of money is much less important than the satisfaction of making something new or building great teams to people who start businesses. People who create, build, and invent new things have primarily non-pecuniary motivations propelling them forward as they add value to the world. We must educate the next generation of entrepreneurs and business leaders with this in mind.  

These traits are nothing new. They are the same ones that Adam Smith was writing about, albeit with different names. They affirm values and principles we find embedded in American culture during the country’s first 100 years, from Benjamin Franklin’s meticulous notes on self-improvement to Ralph Waldo Emerson’s notion of self-reliance to Abraham Lincoln’s observation that hired laborers become business owners as a result of a "just and generous and prosperous system which opens the way to all, gives hope to all, and consequent energy and progress and improvement of condition to all."

We are right to worry about the macro effects of deficits and tariffs, but the most productive way forward for writers and policymakers concerned about our economic future is to focus once again on what prosperity produces and requires at the level of ordinary, individual people trying to make their way every day to that better version of themselves that only they can achieve. 

Ryan Streeter is the Executive Director of the Civitas Institute in the School of Civic Leadership at the University of Texas at Austin.