http://www.nybooks.com/articles/22080
Volume 55, Number 18 · November 20, 2008
Trapped in the New 'You're on Your Own' World
By Robert M. Solow
High Wire: The Precarious Financial Lives of American Families
by Peter Gosselin
Basic Books, 374 pp., $26.95
When the Bush-Cheney administration proposed to replace Social Security
with a system of individually accumulated, individually owned, and
individually invested accounts, my first thought was that its goal was
to take the Social out of Social Security. It took a few minutes longer
to realize that it also intended to take the Security out of Social
Security.
That attempt failed. In recent years, however, a mixture of public and
private policy decisions and impersonal market developments has had the
broad effect of shifting many financial risks from established
institutions, including even society at large, to individuals who are
unable to cope with them in an adequate way. Information may be
impossibly difficult for citizens to process; or else the basic
information may not be available to individuals or private groups.
Sometimes the scale of the possible bad outcomes may be overwhelming.
Sometimes the appropriate insurance market cannot function or just does
not exist. The result is that individuals and families can be the
casualties of situations that once would have been handled by a more
centralized and more bearable allocation of risks.
The current turmoil in credit markets and the recession that is sure to
follow are likely to drive this trend further. Banks, insurance
companies, and other financial institutions have seen too many risks go
sour. They will be more determined than ever to push further risks onto
those needy borrowers who are too weak and too ignorant to bargain hard.
Families, small businesses, and other borrowers of last resort will be
under great pressure.
Peter Gosselin's excellent and thoughtful book, High Wire: The
Precarious Financial Lives of American Families, is not the first to
explore this territory. Two others that come to mind are Louis
Uchitelle's The Disposable American[1] and Jacob Hacker's The Great Risk
Shift.[2] Gosselin is like Uchitelle in combining social criticism with
substantial stories of recognizable people who have been trapped by bad
luck or bad judgment in this new you're-on-your-own world; he differs in
covering a much broader variety of risks and risk-bearers than
Uchitelle's focus on workers and job-related risks. Hacker's book also
ranges over many issues, but does not have Gosselin's expert
journalistic use of recognizable cases. (Professor Hacker is currently
engaged in a Rockefeller Foundation–sponsored effort to construct a
general "Index of Economic Security"—to show empirically how economic
security varies over time and across social groups.)
Gosselin, who works in the Washington bureau of the Los Angeles Times,
does a fine job of connecting the stories he tells to general ideas and
to economy- wide statistical markers, some developed for his particular
purpose. He has produced a readable and valuable book. In this
connection it cheers me up to see how he has profited from a stay at the
Urban Institute, a leading non- ideological research center in
Washington. (I am on the board of the Urban Institute, but our paths
never crossed there, though we are acquainted.)
(clip)
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