July 15, 2010

Preying on those who can least afford it: On Broke, USA: From Pawnshops to Poverty, Inc.How the Working Poor Became Big Business

In the last thirty years, real wages for the majority of America have either remained stagnant or even fallen when tracked against inflation. Some parts of the economy have grown their costs at a much faster pace than the usual consumer good: education, health care, housing. If you were to chart a graph, you could easily see the growing chasm between what the status quo was and where the people really are.

This growing chasm is part of what drove the recent economic calamity. Borrowing of all sorts was at unstable highs, and each personal liquidity crisis snowballed onto the next one. The majority of the destruction is, I hope, at this point finished. What we have now to do is imagine a way to recovery.

_Broke, USA_ is not about the recovery, nor is it necessarily about the collapse. What it is about is the industries that grew and profited from the growing inequity: rent-to-own, check cashing, pawnshops, payday loans, money transfers, pre-paid credit cards, subprime loans. Each of these industries has their defenders, whom usually are also the ones making the profits. Rivlin presents a rather even hand in examining both sides of the issue, talking to both the moguls of the industries and the consumer advocates fighting against the industries.

With the even hand though, he still comes out on the side of reform and restriction. Many of these industries represent the free market at its worst, preying on those who can least afford it, and then telling their victims they should be grateful for the attention. The debt trap is real and scary and a direct effect not of greed necessarily on the part of the victims, but perpetuated by a rapacious system.

I read this book quickly and enjoyed it. I enjoyed it not because it was a nice story to hear, but because Rivlin is a fantastic storyteller.