THE MOST STAGGERING ACCOMPLISHMENT OF CAPITALISM...

Elizabeth Warren, Closet Conservative: The most misunderstood woman in Washington. (Christopher Caldwell, 8/01/11, Weekly Standard)

In 2003 Warren cowrote a brilliant and counterintuitive work of pop economics called The Two-Income Trap. People were going bankrupt at an alarming rate. Since the 1990s, more children had experienced their parents' bankruptcy than their parents' divorce. And yet the economy was booming. So senators like Orrin Hatch seemed to be on solid ground when they attributed these bankruptcies to people who "run up huge bills and then expect society to pay for them." Warren herself later said she was looking for some failure of self-control, for "too many Gameboys." But this was not the case. Bankruptcy was actually getting harder to declare, Warren proved. For bankrupt families, the ratio of nonmortgage debt to income rose from .79 in 1981 to 1.06 in 1991 to 1.5 in 2001. To quote, italics and all, the most stunning line in her book: "Having a child is now the single best predictor that a woman will end up in financial collapse."

Why this was so had nothing to do with consumerism. Parents spent 32 percent less on clothing, and 52 percent less on appliances. What they spent more on was big necessities: mortgages (up 76 percent), cars (up 52 percent), taxes (up 25 percent), and health insurance (up 74 percent). And the reason for all but the last of these was the entry of women into the workplace. Working mothers "ratcheted up the price of a middle-class life for everyone, including families that wanted to keep Mom at home," Warren wrote. As a result, she showed, two-income families have less disposable income than one-income families did in the old days.

...was that it was able to, fairly smoothly, add all those boondoggles, at least temporarily.

Posted by oj at September 13, 2011 8:41 PM
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