In my latest reading of The Conscience of a Liberal, Paul
Krugman refers to a study by Elizabeth Warren and business consultant
Amelia Warren Tyagi (who is also Elizabeth Warren's daughter) concerning
bankruptcy in the U.S. Krugman summarizes their findings on page 247:
"By
2005, just before a new law making it much harder for individuals to
declare bankruptcy took effect, the number of families filing for
bankruptcy each year was five times its level in the early 1980s. The
proximate reason for this surge in bankruptcies was that families were
taking on more debt----and this led to moralistic pronouncements about
people spending too much on luxuries they can't afford. What Warren and
Tyagi found, however, was that middle-class families were actually
spending less on luxuries than they had in the 1970s. Instead
the rise in debt mainly reflected increased spending on housing, largely
driven by competition to get into good school districts. Middle-class
Americans have been caught up in a rat race, not because they're greedy
or foolish but because they're trying to give their children a chance in
an increasingly unequal society. And they're right to be worried: A
bad start can ruin a child's chances for life."
This is very
sobering. And, although Warren and Tyagi wrote this study before the
2008 financial crisis, I'm curious as to whether their findings are in
any way relevant to the sub-prime mortgages that led to that crisis. A
conservative lady once told me that the people who lost their homes
should not be bailed out because they deserved what they got, for they
were greedy, and the Bible condemns greed. Aside from wondering why a
right-wing conservative is suddenly critical of greed, I also question
whether we should be so quick to judge those who tried to purchase homes
that they could not afford. Maybe some did so out of greed, but
perhaps there were many who were just seeking a better future for their
children, and they realized that the best schools were in the areas that
had expensive homes.