The movement to take down Big Tech is one of the worst features of our populist moment, a classic case of killing the goose who lays the golden eggs.
In the Massachusetts Senate race, incumbent Scott Brown has “gone negative” on his Democratic challenger, Harvard Law School Professor Elizabeth Warren. Professor Warren gained fame as the godmother of Dodd-Frank’s Consumer Financial Protection Bureau, which as we speak is rendering capitalism safe by engineering financial products that never occurred to any consumer or financial institution and by simplifying mortgage disclosure forms in a mere 1,099 pages. Senator Brown has targeted Mrs. Warren’s phony claims of “Indian” heritage; her $350,000-plus salary at HLS; her work for an insurance company in matters involving (yikes) asbestos; and other trivia. What he hasn’t said and probably won’t say: she is a nag. A scold. An ideologue. An advocate of a nanny state beyond a Swedish socialist’s wildest imagination. A bureaucratic Bruegel who paints an America of victims—pathetic figures in a landscape of unremitting hostility. Also, Professor Warren is an economic idiot.
Any of Professor Warren copious writings, listed on her HLS website, illustrate the preceding averments; I’ve picked one randomly, a 2005 essay on “What’s Hurting the Middle Class.” The hurt, in a word or two, is excessive debt and leverage. One reason for that misfortune might be that people are spending more than they earn. But this is not actually so, Professor Warren and her co-author explain. It’s just that the stuff people spend on has become more expensive. The biggest item is housing. The authors acknowledge
that the average size of a new home has increased by nearly 40 percent over the past generation (although it is still less than 2,200 square feet). But this statistic tells us only that real-estate developers have decided that building McMansions for the rich is more profitable than building Levittowns. […] The wealthy may be living in spacious new digs, but middle-class families are not. The proportion of families living in older homes has increased by nearly 50 percent over the past generation, leaving a growing number of homeowners grappling with deteriorating roofs, peeling paint, and old wiring. Today, nearly six out of ten families own a home that is more than 25 years old, and nearly a quarter own a home that is more than 50 years old.
Amen. My own abode was constructed in 1952; and the paint… The folks who tell me to buy a paintbrush are the same people who tell our children to buy their own contraceptives. T his is a crisis. Where is the government?
(In fairness, it hasn’t ignored me entirely. When we renovated our bathroom—old wiring and all that—it designed the toilet flush, showerhead, and lightbulbs. On balance I’d like the government to get out of my bathroom and back into my bedroom, where it belongs; but at least it’s been trying.)
Back to crumbling homes and mountains of consumer debt, though: the sad confluence arises from several sources, foremost
Credit. Each year millions of families are trapped by credit-card issuers and mortgage lenders that market deceptive products and use unscrupulous billing practices. America needs to develop product-safety standards for credit cards and mortgages, just as we have for all other consumer products.
Actually we haven’t—and maybe it’s a good thing, too. Earlier in the article, the authors note (on a rare note of good cheer) the impressive reduction in the cost of clothing over the decades:
Today’s toddlers often own nothing but a pair of five-dollar tennis shoes from Wal-Mart. Suits, ties, and pantyhose have been replaced by cotton trousers and knit tops, as “business casual” has swept the nation. New fabrics, new technology, and cheap labor have lowered prices.
By all means let’s hear it for innovation and cheap labor. Could it be, though, that an OSHA with jurisdiction over Vietnamese factories or a Knit Top Safety Commission in the Target aisles would have wiped out the savings? Something like that, we learn from the authors themselves, has happened with cars: because you can no longer dump three kids in the back of a station wagon (long gone, courtesy of the Clean Air Act—my note) but instead, pursuant to government regulations, have to buy the equivalent of a Sherman tank plus NASA-approved booster seats, American families spend way more on cars than they used to. And therefore [sic], we need and, thanks in no small measure to Mrs. Warren, now have a safety agency for financial products. And not a moment too soon:
No one can sell a toaster in the United States that has a one in 11 chance of burning down someone’s home; likewise, a mortgage that has a one in 11 chance of putting someone in foreclosure should be banned. Credit products should be clear, honest, and not loaded with tricks and traps.
And did we mention cheap? Where I teach, we sometimes say such things in class—to make the 1-L’s laugh. The ones who don’t don’t get to be 2-L’s. They’re Harvard material.
Elizabeth Warren is the Madame Defarge of our shining city on the Potomac; the preeminent tricoteuse of our regulatory state. If Senator Brown isn’t making an issue of it, that’s because Professor Warren’s ideological knitting isn’t an electoral vulnerability. It is her principal asset—certainly in Massachusetts, and (I’d wager) in virtually every other state in the nation. The demand for her politics of resentment and regulation is broad and authentic. The case against it is obvious. Alas, it can no longer be explained.