Talk of the Town Tuesday: How Did We Get Here?

In a sense, Elizabeth Warren and Amelia Warren Tyagi's THE TWO-INCOME TRAP and Shira Boss' GREEN WITH ENVY are attempting to answer the same question: How did Americans, collectively, get so far into debt? Rejecting a strictly moral explanation -- that we have all drifted from thrift into servitude -- the fact that we are carrying an average of $46,000 of debt per person in this country* forces self-examination.

It's the moral component that initially put me off Warren and Tyagi's book which examines the effects of women entering the workforce in the past 60 years, and I think it's clear why I might have specific objections to where the book seemed to be going. As more and more women started to work, the authors argue, families adjusted their lifestyles up and caused a monetary arms race to buy into the best school districts; at the same time, they lost the economic incentive of having a full-time caretaker and household economist who, if necessary, could go to work if the family was having a crisis. Due to the combination of these two factors, two salaries actually buy less than one would in 1950, and not just because of child-care costs or super-sized houses. When emergencies happen, families have less wiggle room than ever -- enter medical bills put on credit cards, home-equity loans and bankruptcy.

The point where this book started to turn was where Warren and Tyagi acknowledged what I had been thinking all along: Even if this problem exists, we can't just send working moms home to fix it. And they pay more than lip service to the oft unstated fact in arguments over whether moms should work and stay at home, the reality that for most women this is not a choice. But their suggestions for families and governmental programs for how to encourage a return to the single-income household are a little unrealistic, and for me were still hard to take after the emphasis that women working, not the more diplomatic "a second parent working," triggered this crisis. (I realize it would be historically inaccurate to say otherwise, but refusing to even suggest that either parent could stay home today was problematic for me.)

I saw myself much easier in the subjects of Shira Boss' GREEN WITH ENVY, which opens in a New York City apartment building with a scene between neighbors. The couple next door to Boss and her husband move in burdened with the rumor that they paid for their apartment in dot-com cash and immediately set about redecorating in the way only people with pots of money would do -- or so it seems. Naturally, the truth is more complicated than that, and from this experience and other interviews Boss extrapolated her own theory about how debt became so attractive to us as a society: We see and covet what other people have, so we pursue it on our incomplete information, and then don't have the funds for what we really want in life.

This book came to my attention via a review -- really more like a study guide -- on the personal-finance blog The Simple Dollar, which described it as slightly simplistic but a good quick read. The solutions Boss offers are not really practical or institutional, nor are they particularly prescriptive: Getting yourself to stop envying your neighbors is a noble goal but it won't get you out of the debt you're already in. The trick is, and I don't think the author goes into this as much, to envy the right people. Not every couple can choose to keep one parent at home, but if they identify that as as a goal, they can direct that envy into something good.

Tune in August 27 to hear me talk about a more recent personal finance book, Farnoosh Torabi's YOU'RE SO MONEY, on Talk of the Town with Parker Sunshine. Next week I'll review

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*Sean Maher, "The Great Consumer Crash of 2009," via Sweetney.