More on whether the US is a nation of predatory lending and unwarranted debt, or a land of opportunity, or what

At least 3 of my friends have objected to Barbara Dafoe Whitehead’s lament that once upon a time we were a thrifty nation and savings were stable and grew well and now boohoohoo nothing works anymore because people can invest their own money. No one is saying there aren’t problems with the current arrangement, but perhaps she misses the mark in trying to make this an outright good/evil conflict as opposed to trying to get a better grip on the problem generally.

The most sustained critique is Christine’s [last name withheld unless she wants me to broadcast it], and I’m going to reproduce the things she said in bullet point form here because I can’t really do justice to a topic I don’t know too well:

  • Thrift institutions are most certainly available today. Bank and custodial accounts are there, and anyone can open them. 401k plans didn’t even exist until 1980.
  • Financial advice is plentiful, and one doesn’t need a lot of money to invest in order to get attention.
  • The internet can’t be devalued – plenty of decent investing advice here, as well as the ability to trade cheaply online.
  • Who complains about “usury?” Seriously: there have to be higher interest rates for riskier loans. There are times it is necessary to get your hands on cash with no questions asked – there’s not enough time in those cases to wait to be approved.

Now Christine goes further and says this: too many people do borrow money, and the need to be educated about these things may be greater than ever before. The lack of understanding “compounding interest” is perhaps the most significant issue that needs to be addressed. And the government’s encouraging people to spend whenever hard times hit is also frightfully idiotic – it isn’t like invested money just sits in a vault somewhere.

I think discussion of this topic is vital. There are larger issues than debt here, believe it or not. My suspicion is that prying some more on these lines will reveal what’s happened to the job market for college graduates. For all the complaints about Whitehead’s article, there is something right about her mode of analysis – the question of what we value is critical for an economy, and Christine’s argument is one to be reckoned with because it doesn’t shy away from that issue.

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