but that explains a lot...,
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how credit card reform gets done...,
behavioral economists would no doubt have much to add on the matter of what it is we cannot afford to go without:
The last time I noticed anybody at all making this point was Dan Hind's Jump! You Fuckers! Hind first made it some two years ago, to give you some idea of the interim involved.
That there is a structural imbalance between demand for low-risk savings and affordable credit (c.f. Krugman, "we have an incipient excess supply of savings even at a zero interest rate", which kind of makes one point but not the other) due to the combination of a stagnant median wage and rising income inequality has not been stressed enough, but maybe I'm just reading the wrong people.
If low wage workers cannot afford interest payments on whatever credit it is they need then high wage workers won't have the risk-adverse savings they need. This gets back, perhaps indirectly, to the explanation of this crisis made so well in The Giant Pool of Money: there is a massive glut of savings causing successive asset bubbles as it cascades to quality, turns it to shit, and pours downhill towards lower and lower returns.
Furthermore, at least in the context of the OECD, if low wage workers can't afford to pay down the principal high wage workers will inevitably have to pay to keep them from starving in the streets. That whole plan* about drowning the baby in the bathwater was never going to work until everybody was starving in the streets, and once everybody was starving in the streets it would fail, either by creating a new baby to drown or there being nobody left unimportant enough to rip off.
There is a large set of inoffensive public policy solutions that would shift earnings to high school graduates and drop outs at the expense of higher income workers and capital. Were it any mystery my preference for
expanded basic labor rights might be worth noting. The important point is that it is in my own long term interests to see my high income stagnate so that the security and return on my and everybody else's savings improves, and any high income worker who differs is being economically irrational, if perfectly human.
This becomes a few orders of magnitude more true if you happen to have been working for a bonus on Wall Street and decided to take up a new career path in professionally whining to the New York Times about how the government isn't paying you enough to keep you from leaving your firm for a low income job hawking life insurance, twiddling your thumbs on a jumbo-mortgage estate that's underwater, or a short lived career trying to raid the firm you just left.
* Somewhere along the line I've picked up the notion that Norquist had advocated - back in the 80s in a weird justification for the Reagan deficits - racking up deficit spending on things Grover Norquist likes in order to force long-term structural cuts in welfare, social insurance, et. al. spending Grover Norquist doesn't like. I'm not sure where that notion comes from and can't verify it now beyond some successes under the Clinton Administration, which throws this whole grain of quipping under a shadow of suspicion. I have faint memories of that argument from my conservative talk-radio years as an unskilled teenage laborer, and an even fainter memory of somehow agreeing with it. But memory is a tricky thing, and I didn't have a blog then so that I could point you to that argument now. The early 1990s were clearly a plague infested dark age for mankind.