I'll give it a go, because up until she announced she was running for Senate I was thinking of writing in Warren on the presidential ballot. She is a true champion of the middle class, herself having originated from there. Her scholastic work centered around the middle class and she has a deep understanding of the changes that have taken place over the last few decades that have worked to erode the middle class. Her "vision" is a strong middle class.
Her vision of the world is one in which the government not only protects individuals from unscrupulous behavior of other market participants but also one one in which the government protects the individual from their own cognitive shortcomings and biases.
That is a standard rallying cry against those that hold up government as the last and only hope an individual has to stand up to the power of mega corporations. It is also the same silly argument that spidey uses against affirmative action. Just because you work to undo the
intentional work by large corporations to restrict information and choice by consumers does not mean you think consumers are stupid. It is just a recognition that the corporations have blown past any ethical boundaries (yes I know corporations only have a ethical guide towards making money, but they are "people" right?) and pushing right along the edge of any legal boundaries to swindle money. There is a difference between making money and earning money you know.
As to the latter, leaving aside my general unease with the government assuming a paternalistic role in the lives of individuals, I think the principal problem with such schemes is that they often produce unintended consequences. Take, for example, the CARD Act's prohibition on credit card issuers from raising interest rates. Although this is great for the person whose rates would have been raised, the flat prohibition overlooks that the extension of credit -- especially unsecured credit -- is risky and interest rates are a principal means by which creditor can accurately price the risk posed by his individuals debtors. Denying the creditor the means to accurately price risk means that the cost of the increased credit risk are passed on to: a) existing customers (through annual fees or the like); b) new customers (who find it harder to get a credit card or pay higher interest rate generally).
I think you should learn what the CARD Act actually entails.
http://www.consumerfinance.gov/credit-cards/credit-card-act/feb2011-factsheet/
First the Act prevents raising interest rates
arbitrarily. It does not prevent raising interest rates.
Ill repeat, it does not prevent raising interest rates.
From there I don't know if the rest of your argument is worth debating since it pretty much hinges on that important statement but I'll try even if it is just a waste of time. Companies can price in risk and raise rates if the cardholder shows risky behavior. The amount that the companies were willing to lend at a given rate (say a $5000 limit at 12% is now set in stone so they can't take that loan and reprice it at 20% after you have charged it up. Any interest rate hike will only apply to new balances. But that is okay because the company has already (supposedly) priced in the risk of the limit and rate. A home loan or car loan doesn't fluctuate on a whim, and certainly does not do so
arbitrarily.
Now you have to be pretty clueless about finance to not know that credit card companies worked on teaser rates to lock in debt then would jack the interest because they could. If a consumer was at or near their limit they would have little recourse to balance transfer to a better rate because other issuers wouldn't open up new lines with high utilization. So right as someone hits a rough spot in their life is when they would bring the hammer down and push the rates up so that they can push the balance to overlimit (and the fee included) which coupled with the new higher rate pushes up the monthly minimum to beyond what can be paid (and the late fee included). After interest, late fees, and overlimit fees are priced in; by the time a card company sells off bad debt at a percentage of the "value" the principal amount has likely been paid. They don't really lose money on many defaults, they price the risk just right so they won't. Which is to say they don't actually carry much risk even though they are pricing it in.
The same can be said for the crackdown on payday lenders: yes, they charge high rates of interest but they provide credit that people need. Would it be better that people: a) Don't get money they have a pressing need for; b) worse still, turn to loan sharks or criminal organizations?
What exactly is the difference between a payday lender and a criminal organization?
In effect, some of the reforms she advances -- mostly those related to increased disclosure -- I support. I reject, however, her more expansive and intrusive reforms not only because they stifle individual liberty but, more importantly, they raise costs and will likely have the unintended consequence of driving the most vulnerable members of society out of the financial services sector and into the underground entirely. This paper (
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1649647) does a good job highlighting some of the unintended consequences associated with increased consumer protection.
One of the points of the paper was that "financial innovation" will find loopholes and exploit the regulation. So the problem is that the reforms, according to the paper, are not expansive or intrusive enough to effectively regulate the market. There is very little substance in the paper about raised costs though. Regulation does cost money, but it undoubtedly is cheaper than mega corporations siphoning money from the middle class.
But if your point is that any regulation will need to be revised as market conditions change, then I wholeheartedly agree with you.
Here are my problems with her speech:
1) Fire, police and the like are paid for by the states so it's misleading to suggest that the factory-owners federal tax dollars are used to protect the factory from roaming bands of ruffians.
I can only assume that this is the video that we are talking about:
http://www.youtube.com/watch?v=htX2usfqMEs
In the clip she talks of the factory owner utilizing roads and educated workers which come from federal funds. Police are also partially federally funded. If you recall, Clinton passed a bill to put 100,000 more cops on the street, provided by $200M in federal grant money.
Aside from the fact that federal funds are
indeed used for some of the things she listed off, she was talking in general terms that taxation is used for societal benefit. She wasn't strictly limiting her argument to federal taxation, so I have no idea why you choose to limit what she said to that. Even then you are still incorrect.
2) Given the progressive nature of the US tax code, nearly 47% of Americans don't pay any federal income tax. Thus, her suggesting that the 'rest of us' benefit the factory owner by paying taxes for the roads and other infrastructure is slightly disingenuous (unless she is tacitly endorsing expanding the tax base which is the only scenario under which her proposition would be true). Moreover, the CBO indicates that in 2007 -- the latest year for which figures were available -- the top 1% of earners paid 28% of all tax collected by the federal government (income, payroll and the like). I think it strange to imply that the rich aren't paying their fair share when they pay a higher proportion of overall revenue collected by the federal government (the 28%) and also pay a higher average rate for income tax purposes (23.3%) than those making less than 50k (7.2%) or those making 50-100k (8.9%).
http://www.thedailyshow.com/watch/t...-class-warfare---the-poor-s-free-ride-is-over
If you are trying to look at taxes paid you should also be honest and show how much earnings and/or wealth those groups have. Anything else is just a talking point without substance.
15% of the nation is now in poverty, so I'm not sure why you would expect them to pay income tax. 25% of the nation pays no income tax because their income is limited to tax free retirement income. Collectively that makes up 40% of the population that doesn't pay income tax. The remaining 7% are likely mostly lower middle class that benefit from the Earned Income Credit. If you "fix" the problem of federal income tax receipts you will only move that number slightly. As in 7%.
Of course, that only includes federal income tax. It doesn't begin to touch on all federal taxes paid, much less any state or local taxes.
3) She overlooks that the efforts of the factory owner does not only benefit the factory but also enriches the lives of 'ordinary' people in that we have the opportunity to purchase the products the factory owner is producing. Or, for an example befitting this forum, Sergey Brin and Larry Page have made a lot of money from their creation of Google; furthermore, no one is suggesting that taxes shouldn't be imposed on them for their earnings. To the average person, however, the principal benefit of Google's creation is not that it provided tax revenues for the government but that it created Google.
Eh? Where does she make any sort of assertion that leads you to believe that she does not understand that employers are good for the middle class? That wasn't the point of her speech so why bring it up? Why does she overlook the AIDS problem in Africa? She didn't touch on it in her 2 minute speech. She did little to ease any tension I have of her concern over middle east instability! Why does she overlook that?
Unless you actually have something from her where she makes it clear that entrepreneurs do nothing for ordinary people you are just making a pitiful strawman argument in response to things she "overlooked" during a 2 minute video clip.
That's really the argument in a nutshell. Warren endorses a vision of the world in which the existence of private enterprise is tolerated because it provides money for the government to operate. Critically, however, she implies that government is the entity that is most likely to improve the lot of the ordinary individual. I, however, think that private enterprise enriches the lives of individuals far more than any bureaucrat could hope to and that limiting government intervention will not only increase each individual's liberty but will improve the lot of the ordinary individual.
She has never claimed any of that tripe. You veer between reading between the lines and filling in the gaps to push your fears onto her. In simplistic capitalist terms, a buyer and seller meet in the middle where everything is balanced. When you have huge multinational corporations with tens of thousands of workers and billions in revenue, it throws that balance off. An individual cannot fairly compete with that. The
only recourse an individual has is through the government, as corrupted as it may be.