A book about middle-class bankruptcy, being published this week, includes a chapter co-authored by US Senate candidate Elizabeth Warren. Her contribution interprets newly available data to argue that bankruptcy is primarily, and increasingly, a middle-class phenomenon in America — and that the traditional steps to achieving middle-class status are the very same things contributing to the problem.
"I think her chapter in this book is a nice look back at what she's done for 30 years, and a look forward at what motivates her, and what would interest her if elected," says Katherine Porter, editor of the book, Broke: How Debt Bankrupts the Middle Class (Stanford University Press).
Warren and her co-author, Deborah Thorne of Ohio University, dug into a Consumer Bankruptcy Project study of people who declared bankruptcy in 2007. This was before the economic meltdown — in fact, it mostly reflects households whose financial distress began in or around 2005, when the economy and housing prices were strong. Nevertheless, write Warren and Thorne, their study shows that going to college and buying a home had already become causes of bankruptcy, rather than safeguards against it:
. . .These two traditional strategies for building wealth — college attendance and home-ownership — are increasingly divorced from financial security. In the past, we have assumed that these markers of the middle class strongly protected Americans from the economic stability that often leads to bankruptcy. It appears, however, that the financial tables have turned. . . . It appears that the debts taken on by students and homeowners may turn an otherwise prudent economic move into a high-risk gamble that, for a growing number of people, does not pay off. . . . These data suggest that in the modern economy, the path to prosperity may be far more perilous than anyone previously imagined.
Porter, a former student of Warren's at Harvard Law School who now teaches at the University of California–Irvine, says that Warren began work on the chapter in the summer of 2009, well before a Senate campaign was in her sights. "As she's gotten famous, people have said she's this unchecked, nutty advocate," Porter says. "But she's a serious academic. She's never left behind entirely doing research."
Warren's political opponents, on behalf of Republican senator Scott Brown, have also tried to portray her as an ivory-tower professor, a notion that her chart-heavy contribution to Broke may reinforce. (The Warren campaign did not provide comment on the new book, in response to an inquiry from the Phoenix.)