David Brooks did a good job yesterday of focusing the econoblogosphere's attention on a report entitled "For a New Thrift: Confronting the Debt Culture". Or at least he would have done, if it weren't for the fact that the report isn't actually available online: in order to read it, you need to print out a PDF and send a $7 check in the mail to an address in New York; in return, you'll get a physical copy of the report, which can't (obvs) be copy-and-pasted. As a means of drawing the public's attention to a very important issue, this is probably as idiotic as they come.
In any case, between Brooks and Barbara Dafoe Whitehead, it's at least possible to list a number of very alarming datapoints:
- In 2004 the typical family spent more than 18 percent of its income on debt payments, while 12.2% of families spent more than 40% of their income on debt payments.
- Nearly half of all credit card holders have missed payments in the last year.
- 15 million Americans use a payday lender each month, borrowing at eye-popping APRs: 35 states allow APRs of more than 300%.
- In the Rocky Mountain West (Arizona, Colorado, Idaho, Montana, New Mexico, Utah and Wyoming), the median APR of state usury limits increased from 36% in 1965 to 521% in 2007.
- A household with income under $13,000 spends, on average, $645 a year on lottery tickets, about 9 percent of all income.
- In the Texas Lottery, 18- to 24-year-old players spend a median $50 per month on lottery play, the highest level among all age groups.
This is not, contra Brooks, a function of out-of-control discretionary spending. But it's clearly a problem, all the same, and one to which there are few easy solutions.
Still, there are some good ideas. It would be great if there were more and more-accessible credit unions and other financial institutions which exist to encourage thrift and serve their members rather than their shareholders. And yes, it would be a Really Good Idea for many more states to implement the strict anti-usury laws which have been successful in the 12 states which have implemented them so far.
Then - I know this sounds counterintuitive, but bear with me - state lotteries should be privatized, and the proceeds used to refinance the debts of the poor. Once the cash has been banked, there's very little fiscal cost to future legislation severely restricting where and how lottery tickets can be sold.
It would be great if all of this could be done in a top-down, federally-directed manner, since the states have proven themselves largely incapable of rising to the task of tackling their citizens' debt troubles. But I fear that this battle is going to have to be waged state by state. Which is bad news indeed for people in places like Utah and Montana: there's very little chance of anything happening there.