This article deconstructs the myth that the reason Americans are declaring bankruptcy, and the reason our savings rate is so abysmal, is because we like to buy too much stuff. Very interesting.
I've heard Warren speak, and I thought the key takeaway wasn't we're buying too much stuff in general, but that the middle class overstretches itself buying houses and that it takes two full time incomes to buy houses, so that they are unable to save money for when one worker's unemployed or must leave their job to take care of an incapacitated family member.
I wrote an opinion piece about school vouchers a very long time ago. While the authors of your article don't talk about it specifically, what I describe might be one part of an overall remedy for the real estate situation. I knew that people voted with their feet to choose better school districts for their kids (within their means), but I didn't know how prevalent the practice was. ABC News magazine 20/20 did a whole program on public education in the USA entitled Stupid in America: how we're cheating our kids, just two weeks ago, and covered (among other things) people "cheating" to get their kids into better schools (lying about where they lived).
As for the tax code, the whole thing needs to be retroactively indexed (i.e. all the dollar values adjusted every year for inflation, back to when each dollar value in the tax code was passed in legislation or regulation). We've got to remove bracket creep (and trivialization of fines) that come from Congressional inaction in the face of inflation. Automate it; that's a simple policy decision.
A year and a half ago, PBS Frontline broadcast a fascinating documentary called Secret History of the Credit Card. The authors of your article suggest that the industry is entrapping people with deceptive offers, and while I agree that there are some odious credit card companies out there, the whole industry might have died had usury laws not been removed in a few key states in the late 1970's and early 1980's when interest rates went insanely high (well above usury law limits). As Walter Wriston (former CitiBank CEO/Chairman) put it, "we were borrowing money at 11% and loaning it out at 8% and losing our shirts."
The APR and annual fee disclosure laws on the books now are a good start; more legislation to put more of the standard contract terms into plain english would be good too. Differential pricing (i.e. different interest rates for different customers, based soley on the loan default risk that customer presents) is a good thing; it has made credit much more widely available than it had been before, and that allows high risk debtors to establish credit and a good credit history, and thus climb up the creditworthiness ladder. Previously, they wouldn't have been allowed on the first step of the public ladder; they were at the mercy of loan sharks who do not report debtor behavior (especially good payment history) to the credit history bureaus.
Healthcare? I don't have a solution myself; the politics are very, very messy because it's hard to set the incentives right. I know that the UK's NHS and the Canadian system are not the answer; both have significant failings in that they do not serve their customers well, and the well off simply get their care elsewhere (e.g. in the USA, India, Thailand).
Real public policy can be tediously dull once you actually get into proper data collection and analysis, and leave the myths, moralizing and metaphors behind. But it's what we need to do. It'd be nice to get the Republicans and Democrats to put forth stipulations of fact 60 days prior to each election ...
Agreed. Public policy is not only dull, but you have to realize that government cannot make a single change without that change affecting a bunch of other things. So just saying "well, they should change the law to do X" is not useful, without analyzing the secondary effect of those changes.
Thanks for the link to the articles. They were very interesting. Although the 20/20 article is bullshit, because at least in quite a few states there IS competition. And I haven't seen a significant increase in student performance in states that instituted such competition. Once again, it's easy to claim that we could fix it just by changing X, but that's bull. Also, there is significantly less competition between schools in Europe, so I find their comparison to European schools rather strange. I'm curious why the article says "the parents wouldn't come here." At least where I lived, in Germany, there were two gymnasiums (college-prep schools), and you had no choice between them.
The big difference between schools in Europe and in America are two-fold. First, the kids get tracked early (4th grade in Germany) into college-track, skilled-worker track, and un-skilled worker track. It is possible to change tracks, but very difficult. But it means that when the teacher teaches to the "middle" it's a much different middle than in America. Second, studying, and teachers, are very respected. Mind you, they are not paid all that well. But being a teacher is a very respected position. I think the level of respect (from the adults & parents) makes the relationship of the kids to the teachers very different.
Thanks for the link; it is a good article. It is helpful to see figures in the aggregate, because I have personally seen a lot of blatant overspending in some places I have lived. It is good to know that this is the exception rather than the rule.
But as always with articles that rely almost entirely on quoting statistics, I have to wonder how those statistics were cherry-picked, and I would very much have prefered that the authors cite their sources for those statistics. And their rhetorical zeal sometimes results in some very sloppy and misleading wording. I'll give you just one example -- They say: The typical two-income family today earns nearly 75 percent more than their one-income parents earned a generation ago.
First of all, do they mean exactly what they said, that they are comparing the typical two-income family of today (excluding any one-income families today) with the typical one-income family of a generation ago? Or do they mean, as they obviously imply, that they are comparing the earnings of the typical family of today with the typical family of a generation ago, and oh by the way they used to make their money with one income and now make it with two?
It sounds like nit-picking, but I'm looking for something to explain the discrepancy between what the authors claim and census data. In constant 1999 dollars, the census data say that median household income in all metropolitan statistical areas (including incorporated suburban areas) rose from $37,433 in 1969 to $44,755 in 1999. That is an increase of less than 20%, which is a far cry from the authors' claim of 75%. It would seem that the census figure would greatly bolster their case, so I am doubly confused -- why would they go out of their way to find a figure that weakens their basic assertion?
The authors also conveniently decided that a "generation" was 35 years -- from 1970 to 2005. If they had used a more accurate view of a generation, they would have been looking at 1980, when the prime interest rate hit 20%, and mortgage rates were through the roof as a consequence, and there was a hot housing market with high prices. That wouldn't have served their argument very well.
I think the article makes some very good points in general, I'm just ticked that they didn't cite their statistical sources. But I supposed the one author wants me to buy her book, and that will contain the cites. ;-)
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(no subject)
Date: 2006-01-25 05:01 pm (UTC)(no subject)
Date: 2006-01-25 07:08 pm (UTC)(no subject)
Date: 2006-01-26 02:36 am (UTC)As for the tax code, the whole thing needs to be retroactively indexed (i.e. all the dollar values adjusted every year for inflation, back to when each dollar value in the tax code was passed in legislation or regulation). We've got to remove bracket creep (and trivialization of fines) that come from Congressional inaction in the face of inflation. Automate it; that's a simple policy decision.
A year and a half ago, PBS Frontline broadcast a fascinating documentary called Secret History of the Credit Card. The authors of your article suggest that the industry is entrapping people with deceptive offers, and while I agree that there are some odious credit card companies out there, the whole industry might have died had usury laws not been removed in a few key states in the late 1970's and early 1980's when interest rates went insanely high (well above usury law limits). As Walter Wriston (former CitiBank CEO/Chairman) put it, "we were borrowing money at 11% and loaning it out at 8% and losing our shirts."
The APR and annual fee disclosure laws on the books now are a good start; more legislation to put more of the standard contract terms into plain english would be good too. Differential pricing (i.e. different interest rates for different customers, based soley on the loan default risk that customer presents) is a good thing; it has made credit much more widely available than it had been before, and that allows high risk debtors to establish credit and a good credit history, and thus climb up the creditworthiness ladder. Previously, they wouldn't have been allowed on the first step of the public ladder; they were at the mercy of loan sharks who do not report debtor behavior (especially good payment history) to the credit history bureaus.
Healthcare? I don't have a solution myself; the politics are very, very messy because it's hard to set the incentives right. I know that the UK's NHS and the Canadian system are not the answer; both have significant failings in that they do not serve their customers well, and the well off simply get their care elsewhere (e.g. in the USA, India, Thailand).
Real public policy can be tediously dull once you actually get into proper data collection and analysis, and leave the myths, moralizing and metaphors behind. But it's what we need to do. It'd be nice to get the Republicans and Democrats to put forth stipulations of fact 60 days prior to each election ...
(no subject)
Date: 2006-01-26 06:53 am (UTC)(no subject)
Date: 2006-01-28 11:53 pm (UTC)Thanks for the link to the articles. They were very interesting. Although the 20/20 article is bullshit, because at least in quite a few states there IS competition. And I haven't seen a significant increase in student performance in states that instituted such competition. Once again, it's easy to claim that we could fix it just by changing X, but that's bull. Also, there is significantly less competition between schools in Europe, so I find their comparison to European schools rather strange. I'm curious why the article says "the parents wouldn't come here." At least where I lived, in Germany, there were two gymnasiums (college-prep schools), and you had no choice between them.
The big difference between schools in Europe and in America are two-fold. First, the kids get tracked early (4th grade in Germany) into college-track, skilled-worker track, and un-skilled worker track. It is possible to change tracks, but very difficult. But it means that when the teacher teaches to the "middle" it's a much different middle than in America. Second, studying, and teachers, are very respected. Mind you, they are not paid all that well. But being a teacher is a very respected position. I think the level of respect (from the adults & parents) makes the relationship of the kids to the teachers very different.
(no subject)
Date: 2006-01-30 10:42 am (UTC)But as always with articles that rely almost entirely on quoting statistics, I have to wonder how those statistics were cherry-picked, and I would very much have prefered that the authors cite their sources for those statistics. And their rhetorical zeal sometimes results in some very sloppy and misleading wording. I'll give you just one example -- They say: The typical two-income family today earns nearly 75 percent more than their one-income parents earned a generation ago.
First of all, do they mean exactly what they said, that they are comparing the typical two-income family of today (excluding any one-income families today) with the typical one-income family of a generation ago? Or do they mean, as they obviously imply, that they are comparing the earnings of the typical family of today with the typical family of a generation ago, and oh by the way they used to make their money with one income and now make it with two?
It sounds like nit-picking, but I'm looking for something to explain the discrepancy between what the authors claim and census data. In constant 1999 dollars, the census data say that median household income in all metropolitan statistical areas (including incorporated suburban areas) rose from $37,433 in 1969 to $44,755 in 1999. That is an increase of less than 20%, which is a far cry from the authors' claim of 75%. It would seem that the census figure would greatly bolster their case, so I am doubly confused -- why would they go out of their way to find a figure that weakens their basic assertion?
The authors also conveniently decided that a "generation" was 35 years -- from 1970 to 2005. If they had used a more accurate view of a generation, they would have been looking at 1980, when the prime interest rate hit 20%, and mortgage rates were through the roof as a consequence, and there was a hot housing market with high prices. That wouldn't have served their argument very well.
I think the article makes some very good points in general, I'm just ticked that they didn't cite their statistical sources. But I supposed the one author wants me to buy her book, and that will contain the cites. ;-)