While the author brought up a valid and important point about subprime lending and the costs of real estate, her declaration that the "overconsumption myth" as concerns middle-class American families is just a myth sidesteps the definition of consumption and its expansion to encompass more aspects of American life.
Mieszkowski points to large fixed expenses: mortgages, health insurance, preschool, after-school care, cars and college as what are causing the middle class to spend beyond their means. However, Mieszkowski doesn't explore the position that many of these "fixed expenses" are not fixed, in that these are things that were not expenses of many middle-class families in the '70s (the author's point of comparison).
I agree with the author that child-related expenses are the great financial divide between the bankruptcy-prone middle-class parents and the less likely to go bankrupt childless couple. But Mieszkowski ignores the fact that middle-class parents are spending money on things for their children (and I'm not referring to PlayStations or designer clothing) that earlier generations' parents did not. I believe that these new "fixed" expenses are a result of systemically enforced competition and anxiety about educational success and personal development of children. I would argue that these new and increased costs for child development and education are a result of the forces of consumption.
From the Middle American weeklies like Time and Newsweek to parenting magazines to the middle-class parents' college alumni publications, articles and advertisements exhort parents to not spare any expense or opportunity to increase their child's "potential for success" or give their child a "competitive advantage." As consumption is often portrayed as doing one's patriotic duty to America, consumption in child rearing is viewed as being a good parent, with the subtext, that should one ignore these opportunities, one is a negligent parent.
For example, preschool education for children was not viewed as "necessary" or "important" for children in the '70s. It was often only utilized by working mothers and religious parents. I'd be interested to see data on the number and "missions" of contemporary preschools, as I suspect that most '70s preschools were religiously affiliated and served church communities. Today, preschool, while mandatory in few regions, is seen as necessary to give children a "competitive" edge in their schooling and enable them to be successful socially and academically once the children begin mandatory schooling. After-school care is another realm that was not as prevalent a "fixed expense" in the '70s, the generation of latchkey kids.
The school district/real estate issue that Mieszkowski intelligently addresses is another facet of child-rearing consumption that was not as dominant in the '70s as today. Many '70s parents believed, or rather, did not distrust, the public school system, and did little "comparative shopping." Various crises in public education have contributed to this, often spurred by politicians with supply-side market-driven economic policies.
The idea that "if it was good enough for us, it's good enough for our kids" is what has changed in middle-class families. Today's parents either believe or are coerced to buy into a notion that things should be better for their children. This notion is not only used in marketing preschools, day care, study aids and private K-12 institutions, but it can be seen in pharmaceutical advertising for drugs like Ritalin and other ADHD prescriptions, test prep courses, athletic programs and other extracurricular activities, and is even utilized before conception in the discourse of fertility clinics, sperm banks, and egg donor facilities, which pay a premium for Ivy League ova. If this isn't consumption, I don't know what is.
-- Sarah Lockhart
Ms. Mieszkowski's article got me thinking about the different way people approach shopping for real estate vs. just about everything else. It seems that even high-earning couples with or without kids can be rational in their choice of car or clothing or interior furnishings, recognizing the cost point beyond which their budget would break. But, when it comes to housing, people feel the sky is the limit. While the numbers on subprime debt in her article were eye-opening and suggest there are factors beyond the buyer's control at work in this "unfair fight," it seems to me that home buying can indeed be a form of overconsumption people aren't aware of even as they practice it.
Partly, this seems to result from what I think of as the "investment myth" of real estate, which holds that in good markets like California, you can only make money from your house; it cannot hurt you no matter what you do wrong. No one seems to have an answer when I, as a single guy contemplating my first house purchase, naively ask, "How am I supposed to enjoy this 20 percent increase in the price of my new house? By selling in two years and moving into a tent?" When challenged about why I should increase my real housing costs (even after tax benefits, etc.) by several hundred to several thousand (!) dollars per month just for the privilege of owning rather than renting the room my bed is stored in, homeowners take me on a confusing verbal joy ride that includes talk of "annual percentage increase in value," "fixed housing costs while your salary increases," "freedom from being moved out by landlords coming to reoccupy," and of course the perennial favorite of "tax savings of X dollars per year over what you get back in taxes now!" Many of these things are valuable of course, but it's striking to me how widespread and deeply ingrained these justifications are and how rarely people question any of them.
As an outsider looking in, I was struggling with what I see as a disconnect even before I read these scary numbers on mortgages being behind so many personal bankruptcies. The real estate interests seem to have simultaneously propagated an exaggerated view of the benefits of the 30-year ball-and-chain while keeping hidden the true costs of home ownership to the average U.S. family mentioned in the article. The result is that even educated families are convinced it's worthwhile to cut corners on day-to-day quality-of-life items like food and going out to the movies and mind-expanding travel while thinking nothing of shelling out obscene monthly sums to keep three people in a place twice as big as I had growing up in a family of four kids. Perhaps there's a magical benefit that huge mortgage will provide for me three years from now that will make giving up my weekend getaways to the mountains in the meantime a no-brainer; if so, could Salon please hurry up and publish that exposé?
-- Steve Fletcher
Katharine Mieszkowski's interview with Elizabeth Warren looked promising enough, but in the end it turned out to be the same old blame game. In Warren's world it isn't the overspending consumer who's at fault, but the companies who got him into that situation in the first place.
Credit card and home mortgage companies are convenient scapegoats whenever the going gets tough. After all, starts the typical argument in favor of tarring and feathering the CEOs of these companies, consumers wouldn't be in the throes of bankruptcy or foreclosure if they hadn't been given that money in the first place. Never mind that full disclosure of loan terms are required by law to be made available before an American consumer signs the contract. These people know exactly what they're getting themselves into and chose to ignore the possible consequences.
I realize that personal responsibility is an idea bordering upon blasphemy these days, but most of the American middle class (as described by Warren) have only themselves, their warped sense of entitlement, and their blinding greed to blame for their predicament. The only real tragedy here is that those of us who have chosen to plan sensibly for our own futures, instead of trying to "have it all," will eventually have to pick up the tab to bail out Warren's deadbeats.
-- Dan Berkes
Your story totally misses the point. If couples now have 75 percent more income than a generation ago, but can't even afford the basic necessities, there is a lot more going on than a bidding war for real estate in good public school districts. It means in real terms, inflation has been grossly understated for years and years, and Americans are just a lot poorer than they used to be. There is nobody measuring value of lost retirement benefits, reduced health benefits, reduced job security, etc., because the folks making out like bandits on this hidden inflation own every state and federal government office in the county. This deterioration of the American living standard has been going on for a generation, and nobody says "boo" about it because they've got their eyes on the wrong shell (the ones called the bull market, the GDP/GNP and the understated inflation stats).
-- Tim Carolan
Professor Warren suggests that Congress should agree to put up a commitment of money since she is "really worried that the public school system is in grave danger." I don't think professor Warren is looking at the problem correctly. Congress, as currently constituted, has every intention of making sure that the public school system fails. The only school system that they will support is a network of tightly controlled, religious schools funded with vouchers from the money that should be helping to provide a public education for everyone.
-- Tom Gasaway
Regarding "Americans Are Not Going Broke Over Lattes," I'd like to offer a testimonial. My wife and I have been married one year; our first child is 8 months old. Before we were married, I bought a modest home in our "destination" city's most desirable school district, in part so my future children could go to the best schools in town. Between 1999 and the present, however, my income dropped sharply. Between the two of us we now take home about $40,000 annually. We looked at our finances and realized that our home was killing us -- the property tax alone was $1,900 annually. Realizing our little girl would not enter school for five years, we swallowed our white liberal middle-class pride, sold our house and bought a home in a working-class neighborhood on the outskirts of town.
Our friends couldn't believe it, but financially we couldn't resist -- we are now literally paying less money for a bigger house on a large 1/3 acre lot filled with big trees, where property taxes are a third of what we had been paying. Financially, we improved our situation dramatically. Sure, our neighbors are factory workers who drive muscle cars, but they bring us pies and their kids all play together in the dead-end street. The experience has forced me to rethink the assumption that upscale neighborhoods and schools make better people. If we stay where we are, our daughter will grow up in a household with parents who aren't constantly stressed about money, which now seems more important than having lawyers' kids for classmates.
-- Jason Moss
As an at-home mother, one of a family of four living on a state college professor's salary, I can say that it is possible to have a middle-class life on a single salary, if from the start you commit to living within that one income, you don't live in a very tight housing market, and you maintain a pathological fear of debt (all we have at the moment is a mortgage, the car just got paid off). I know families with less than mine that do it. The system can be bucked.
However, I agree that the public school system is in trouble. There is no way we can move to a more expensive neighborhood to get our kids into a better public school that isn't all that great anyway. I have to wonder whether the home-schooling boom is partly driven by the same economic difficulties that Mieszkowski describes so well.
-- Sara Catterall
This sounds a lot like the predicament the federal government is in, thanks to George W. Bush. The Republicans seem to think that they can balance the federal budget solely on budget cuts. It doesn't work that way, for many of the exact same reasons cited in this article about middle-class bankruptcy -- fixed costs.
-- Dave Jansing