Brink Lindsey writes on a Yale professor's charges that family finances are becoming alarmingly unstable
Now Jacob Hacker, a political science professor at Yale, seeks in "The Great Risk Shift" to call attention to another alleged failing of the new, more market-oriented economy: rising levels of risk and insecurity. "Over the last generation," he writes, "we have witnessed a massive transfer of economic risk from broad structures of insurance, including those sponsored by the corporate sector as well as by government, onto the fragile balance sheets of American families."
As evidence, Mr. Hacker cites the growing volatility of family incomes, escalating bankruptcy and foreclosure rates, the collapse of defined-benefit corporate pensions, and the swelling ranks of Americans without health insurance. And where does the primary blame for these ills reside?
He points the finger at "America's sweeping transformation away from an all-in-the-same-boat philosophy of shared risk toward a go-it-alone vision of personal responsibility." The consequences of this "Personal Responsibility Crusade" can be seen in the rapid rise of 401(k) plans, the creation of Health Savings Accounts and the proposal to replace traditional Social Security benefits with personal retirement accounts.
Lindsey notes that these changes have not resulted in decreased material wealth - quite the opposite:
Next, look at the two main indicators of middle-class status: a home of one's own and a college degree. Between 1970 and 2004, the homeownership rate climbed to 69% from 63%, even as the physical size of the median new home grew by nearly 60%. Back in 1970, 11% of Americans 25 years of age or older had a college or higher degree. By 2004, the figure had risen to 28%.
As to consumer possessions, the following comparison should suffice to make the point. In 1971, 45% of American households had clothes dryers, 19% had dishwashers, 83% had refrigerators, 32% had air conditioning, and 43% had color televisions. By the mid-1990s all of these ownership rates were exceeded even by Americans below the poverty line.
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