Tuesday, November 4, 2008

Beware the Coming Holiday Tales of Economic Woe

Posted By on Tue, Nov 4, 2008 at 2:20 PM

click to enlarge man_with_pockets_out.jpg
Quick, someone get this man a reporter! With Halloween already passed and Thanksgiving just around the corner, America is settling in nicely for what looks to be a lean holiday season. Not literally, of course. The double-dose of gluttonous family gatherings and shorter, colder days guarantees we'll all become slightly more depressed, slightly heavier versions of our normal selves come calendar-flippin' time. No, lean refers to money. As in, thanks to this economy we'll probably have a harder time finding enough to pay off the credit card debt we're bound to run up in the months before Christmas. And inevitably, some (or thousands) of newspaper reporters are going to run an article featuring a sad sack family's tale of woe and attempt to convince you this is anything new. Fortunately, there's people out there willing to call B.S. on that theory... Take Virginia Postrel. She writes a monthly column for Atlantic Monthly called "Culture and Commerce." Why such a broad title? Because she's damn smart. And resourceful: When Postrel was diagnosed with breast cancer in 2005, she used the opportunity to write more about hospital aesthetics, a subject she'd already touched on in one of her books. That's one way to make lemonade. Anyway, Postrel's latest article makes a convincing argument for, not against, debt. Not debt on a national scale (hand-wringing in that instance is more than warranted), but the kind of debt incurred by average people:
The expansion of consumer credit is one of the great economic achievements of the past century. One institutional and technological innovation after another has made borrowing easier and cheaper for rich and poor alike. With each development have come fears—sometimes fueled by the unforeseen problems that inevitably accompany new practices—that this is the change that surely will lead to disaster. Yet a half century after Black’s warnings, doomsday has not arrived, the “consumer-credit explosion” continues, and most consumers are much better off.
Postrel makes room for what you'd naturally assume to be a rebuttal--neglecting your mortgage in favor of the Nieman Marcus shoe department is, and always will be, a boneheaded move. But she doesn't take kindly to the Chicken Little proclamations of lazy journalists rehashing an old story. Nor does she spare the presidential candidates who package the "problem" so tidily as to misconstrue the point: When Obama bemoans the length of modern-day credit-card contracts (from one page to 30), Postrel sets him straight; the added bulk is partly due to adjustable interest rates, she says, a fairly recent innovation that has allowed for a wider range of borrowers. Postrel's article is a quick read and a helpful one at that. Debt anxiety may be real, but it's nothing new. No matter what that reporter might tell you.

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