Personal assets help one get ahead

I’m still reading magazines I kept while cleaning out Dad’s house. Every so often one has something worth sharing. The one I just finished is Washington Monthly for July/Aug 2012, just before Obama was re-elected. This edition featured a series of articles on the financial health of middle class America. This came out only four years after the Great Recession, which had a huge impact on the middle class, though not the only impact. I’ll describe some of the articles briefly.

Since about 1980 the middle class has been squeezed by two things. First was wages barely keeping up with inflation. But the middle class wanted to maintain their middle class living, so financed it with debt. Which leads to the second thing, predatory debt practices. The most common of these, though far from the only one, was high interest rates on credit cards.

The next article was about the creation of the Consumer Financial Protection Bureau, with the hope that Congress would let it live long enough to be effective. Since this article was written in 2012 the CFPB has done marvelous work – which is why the nasty guy is doing all he can to make it ineffective.

Stakeholder accounts are the idea that everyone at birth gets a savings account with money put in it by the government. The account owner can withdraw at 18 for college or training expenses or perhaps at 22 to start a business.

There has been a sharp drop in entrepreneurship, of people starting their own businesses. We’ve heard the GOP talk of these small businesses creating most of the jobs in the economy. But small businesses face two big problems. First, the consolidation of banks, making less money available to start a small business. Second, since 1980 there has been little enforcement of anti-monopoly laws. Most areas where a person might start a business, from farming to hardware stores, a behemoth already sits in the way.

Studies have shown when a young person has some sort of personal assets (such as a bank account) that person is more likely to attend college. There are suggestions for ways to make that happen.

With college so expensive there is a growing trend to give college credit for things a person already knows. This is no longer about diploma mills.

A person with a solar panel on his house has a way of generating money. Corporate energy companies are trying to prevent that.

And six years later these problems still exist and the ideas have not been implemented.

I understand the reason for that. Because of ranking, the GOP and its backers want us to be poor and do not want us to have a way to better ourselves. I thought of that while reading each articles in the series.