Brown, Christopher.  Inequality, consumer credit and the saving puzzle.  E. Elgar, 2008.  183p bibl index; ISBN 9781847205094, $100.00. Reviewed in 2009apr CHOICE.
46-4551  HG3755  MARC

Brown (Arkansas State Univ.) makes an important contribution to the field of consumer credit by presenting a broad view of the issues and problems associated with growing consumer credit habits, culture, and institutions. An important thesis he puts forth is that expanding income inequality has resulted in increased demand for credit and, consequently, consistently rising debt levels. This has produced both practical lending channels and predatory lenders. The author discusses many of these issues, giving an overarching presentation that explains the growth of the consumer credit market and development of new credit products. Most importantly, he describes how this expansion in credit was a demand-side phenomenon, because with decreasing (or stagnant) real median wages, people used credit as a substitute for lost income. However, credit expansion was also the result of supply-side effects. Changes in lending laws made it possible for banks (and other institutions) to extend more credit to more borrowers–and more importantly, to riskier borrowers. This book effectively uses a heterodox methodology, which will appeal to a wide audience of social scientists. Summing Up: Highly recommended. Upper-division undergraduate and graduate students, researchers, and professionals. — R. H. Scott, Monmouth University

Choosing the nation’s fiscal future, Committee on the Fiscal Future of the United States, Division of Behavioral and Social Sciences and Education, National Research Council and National Academy of Public Administration.  National Academies Press, 2010.  338p bibl; ISBN 9780309147231 pbk, $53.95. Reviewed in 2010jul CHOICE.
47-6373  HJ2051  MARC

No surprises in this National Academies committee report for government finance scholars and professionals: the federal government is on a path of growing deficits and escalating debt to GDP ratios that promises a markedly reduced American standard of living and greater dependence on investment choices by foreigners. Medicare and Medicaid are major culprits, along with Social Security, but the rest of government, including a flawed tax system, contributes to the deficit as well. The report outlines multiple corrective paths involving reduced spending and increased taxes, and various structural revisions to the budget process (automatic balancing mechanisms, accrual accounting, etc.) to help. An early version of the recently passed health care reform act is mentioned but not explicitly examined. In any case, the act would not significantly close the fiscal gap reported here. Unfortunately, this work offers no convincing and useful strategy for getting the political system to respond to the looming crisis–and that is the problem. The report does not mention the fiscal imbalances of state and local governments, and they are likely to have disastrous impacts on the public even sooner than the sorry state of federal finances. This sobering report can be viewed online for free http://www.nap.edu/catalog.php?record_id=12808. Summing Up: Recommended. All collections/readership levels. — J. L. Mikesell, Indiana University—Bloomington

Cline, William R.  The United States as a debtor nation.  Institute for International Economics/Center for Global Development, 2005.  304p bibl index afp ISBN 0881323993 pbk, $26.95. Reviewed in 2006mar CHOICE.
43-4137  HJ8119  2005-18957 CIP

Today’s media agonize over the massive US trade deficit and the corresponding buildup of American assets in the hands of foreign investors and central banks. However, any serious attempts to redress the imbalances are likely to cause as much pain in the creditor countries as in the US. What would they prefer: a massive appreciation of their currencies against the dollar, an induced US recession that would knock the bottom out of imports (other countries’ exports), or imposition of US trade barriers to try to bring down the current account imbalance? Evidently none of the above, if China, incrementally the largest investor, is at all indicative, preferring to stay the course and hope for a soft landing. Cline (Institute for International Economics) offers a clearheaded assessment of these issues, tracing the US “debt cycle” and the consequent buildup of foreign-owned asset portfolios and their likely evolution; linkage of the US fiscal imbalance to the growth of foreign-owned assets (notwithstanding the fact that the buildup hardly abated during the Clinton budget surpluses during the 1990s); how sustainable the US imbalances may in fact be and their implications for the rest of the world; and prospects for the future. Excellent bibliography. Summing Up: Highly recommended. Lower-division undergraduate through professional collections. — I. Walter, New York University

Fisher, Patrick.  The politics of taxing and spending.  L. Rienner, 2009.  193p bibl index afp; ISBN 9781588266446, $55.00. Reviewed in 2009oct CHOICE.
47-1126 HJ2381  2008-40203 CIP

Less than 10 years ago, the federal budget was running a surplus. The American public was entertaining the prospect of reducing the federal debt. In fiscal year 2009 experts project the deficit will exceed one trillion dollars; by comparison, the deficits of the 1970s appear quaint rather than cause for alarm. As this book’s title suggests, the politics of taxing and the politics of spending are distinct: they have their own institutional and political dynamics that create downward pressures on taxes and upward pressures on spending. Fisher’s work places the politics of taxing and spending in the context of the larger concern for budgeting in a democracy, discusses how budgets reflect the preferences of US voters, and dismisses the panaceas offered by many partisans and pundits. Fisher (Seton Hall Univ.) provides a sober, comprehensive, and well-researched review of the issues surrounding the politics of taxing and spending. Students and general readers will benefit from this balanced appraisal of the complexities of budget policy, complete with examples from recent budget battles, and his thoughtful discussion of the role of US democratic and social values that shape the politics of taxing and spending. Summing Up: Recommended. General readers, upper-division undergraduate students, and graduate students. — S. Q. Kelly, California State University Channel Islands

Household credit usage: personal debt and mortgages, ed. by Sumit Agarwal and Brent W. Ambrose.  Palgrave Macmillan, 2007.  290p bibl indexes afp ISBN 1-4039-8392-5, $89.95; ISBN 9781403983923, $89.95. Reviewed in 2008jun CHOICE.
45-5679  HG3755  2007-7637 CIP

Although the media popularize consumer credit topics, especially recently with the subprime mortgage crisis, economists have largely ignored these topics in the past several decades (mostly in favor of macroeconomic issues). This book therefore is a welcome addition to the limited literature because the contributors, specialists in the broad field of consumer credit, explore more completely topics such as mortgages, credit cards, payday lending, and credit counseling to investigate how the consumer credit market has changed and is changing. Rather than providing a detailed introduction to each topic, most chapters typically extend the literature by empirically testing a specific question related to the topic, e.g., whether women-owned businesses are more credit constrained than male-owned ones (chapter 8); whether debit cards are growing in popularity (chapter 9); and whether it is better to rent or buy a home (chapter 12). As is the case with most edited volumes, some chapters are stronger than others, but in general this book adds interesting new empirical research to the area of consumer credit and opens discussions for further important research. Summing Up: Highly recommended. Upper-division undergraduate students through faculty/researchers. — R. H. Scott, Monmouth University

Hyman, Louis.  Debtor nation: the history of America in red ink.  Princeton, 2011.  376p bibl index afp; ISBN 9780691140681, $35.00. Reviewed in 2011jul CHOICE.
48-6410  HG3756  2010-31594 CIP

Debtor Nation is an exceptional piece of scholarship. Beautifully written, painstakingly documented, and altogether persuasive, the book provides a comprehensive look at the history of consumer debt in the US. While all chapters are engrossing, chapters 1, 6, and 7 merit special attention. The first chapter provides an extended discussion of the origins of the modern credit system. Later, in chapters 6 and 7, Hyman, a historian, creates a detailed picture of how Americans have “created our contemporary indebted society.” For example, chapter 6 explores issues of race, class, and gender and how these characteristics have affected access to credit. This book is a must read for anyone who wants to understand the modern credit system in the US. It manages to weave together a long history of developments within America’s credit markets in a narrative that is both fascinating and frightening. Summing Up: Essential. All readers. — F. H. Smith, Davidson College

Kamenetz, Anya.  Generation debt: why now is a terrible time to be young.  Riverhead Books, 2006.  265p bibl ISBN 1-59448-907-6, $23.95. Reviewed in 2006jun CHOICE.
43-6003  HQ799  2005-44720 CIP

Building on articles published in The Village Voice and The Nation, 24-year-old Kamenetz deplores current economic conditions of the generation age 18-34 as it confronts layoffs, underemployment, low incomes, and lack of retirement plans and paid vacations. None but the very rich are said to escape the crushing burden of college graduates’ loan repayments, which exceed earnings from attainable low-paying jobs. Furthermore, those who do not get a four-year college degree appear destined to remain in the working class in far greater numbers than in previous generations. Much of the book reports circumstances of young people in deep economic stress, frustrated in their jobs while worried about losing them. The future appears bleak. The book cites experts such as Lawrence J. Kotlikoff and others who forecast an overwhelming tax burden on young people to finance federal payments as the number of elderly grows and retirement and health outlays rise. To avoid these calamities, Kamenetz urges a strong national generation movement–for higher education funding, fairer credit laws, a better-designed school-to-work system, a living wage, health care, etc. Although the book is well written and very readable, many will challenge so grim a picture of current conditions and future prospects of young people. Summing Up: Recommended. General readers; students, lower-division undergraduates and up. — H. I. Liebling, emeritus, Lafayette College

Kelly, Robert E.  The national debt of the United States.  2nd ed.  McFarland, 2008.  393p bibl index afp; ISBN 9780786432332 pbk, $45.00. Reviewed in 2008aug CHOICE.
45-6904  HJ8119  2007-49741 CIP

Kelly (retired CPA, corporate consultant, and columnist) presents brief histories of the growth of US public debt under the administrations of 12 presidents, from Franklin D. Roosevelt to George W. Bush. For each administration, he identifies sectors contributing to public debt growth and analyzes them with respect to the social, economic, and political settings of each period. Kelly discusses at length how presidents, members of Congress, political leaders, and judges affected fiscal policy, and he provides thumbnail characterizations of their personalities and prejudices. Detailed investigation focuses on the role each president played in major public budget decisions, which is supported by figures showing start-off debt and its subsequent development in each case. Kelly’s major conclusion is that the government’s power to borrow has been misused over the past four decades in a so-called orgy of social spending, propagated by human failures rather than compelling events; i.e., the political agendas of officials determined policy. This book is easily accessible to the general public and is especially useful because of its abundant time-sequenced tables. Many readers will find it appropriate to refer to so-called principles of economics textbooks on the controversial topic of rising debt in the US economy. Summing Up: Recommended. General readers, all levels of undergraduate students. — H. I. Liebling, emeritus, Lafayette College

Mann, Bruce H.  Republic of debtors: bankruptcy in the age of American independence.  Harvard, 2002.  344p index ISBN 0-674-00902-9, $29.95. Reviewed in 2003jun CHOICE.
40-5918  HG3766  2002-68619 CIP

Mann (law and history, Univ. of Pennsylvania) has written an interesting account of the evolution of the treatment of insolvency in the early Republic from rigid Puritan standards that viewed bankruptcy as moral weakness and lack of virtue to bankruptcy being seen as a normal consequence of risk taking increasingly evident in the marketization of economic activity. Among the topics treated are the relationship between debtor and creditor and the changing legal and social implications of a variety of debt instruments; the chaotic conditions of debtors’ prison in the early Republic; the political issues and events leading to the federalization of bankruptcy law in the early 19th century; and a detailed analysis of several early contentious and complicated bankruptcy cases. However, in spite of the passage of the first permanent bankruptcy law in 1898, the tension between bankruptcy viewed as moral versus economic failure remains to this day, even though, as Mann concludes, there is “abundant empirical proof that individuals file for bankruptcy for reasons of genuine financial distress untouched by the fraud or irresponsibility alleged by modern moralists.” Summing Up: Recommended. Public and academic library collections; upper-division undergraduates through faculty. — F. Petrella, College of the Holy Cross

Pettifor, Ann.  The coming First World debt crisis.  Palgrave Macmillan, 2006.  190p bibl index ISBN 0-230-00785-6, $85.00; ISBN 0230007848 pbk, $22.95. Reviewed in 2007mar CHOICE.
44-3969  HC59  2006-50315 CIP

Pettifor was the cofounder of Jubilee 2000, the group that campaigned successfully for Third World debt relief. In this book she argues against the mix of economics, politics, and ethics that created the Third World debt crisis and, as the title suggests, might soon produce a global debt crisis. As the author acknowledges, this book is more of a polemic than an academic analysis of debt. The book covers a very large swath of economic history in its telling of the story of the rise of finance capitalism and the inflation of Third and First World debt bubbles. Inevitably, such analysis is selective and superficial, however interesting and useful it might be to readers who are unfamiliar with this material. The author argues that the financial sector continues to have undue influence on economic policies and that the ethics of interest and debt need to be reviewed and usury laws strengthened. Pettifor’s analysis of events that could “detonate” a global debt crisis is very interesting. Her sharp ethical critique of finance is not much heard any more; perhaps, like Jubilee 2000, it is an idea whose time has come. “Sources and Suggested Readings” for each chapter. Summing Up: Recommended. General readers. – M. Veseth, University of Puget Sound

Phillips, Kevin.  Bad money: reckless finance, failed politics, and the global crisis of American capitalism.  Viking, 2008.  239p bibl index; ISBN 9780670019076, $25.95. Reviewed in 2009feb CHOICE.
46-3363  HC106  2007-45559 CIP

Phillips, a political and economic commentator for over three decades and author of numerous books including American Theocracy (2006) and American Dynasty (2004), claims the decline in US hegemony has started as a result of financial sector excesses. He views the bursting of the housing and mortgage credit bubble as marking the beginning of the slide. Other contributing factors include reliance on excessive debt creation and expansion of credit, development of exotic and poorly understood credit instruments, depreciation of the dollar, peaking in oil production, climate change, poor positioning in natural resource competition and protectionism, political correctness, and religious fundamentalism. Each of these and others are supported by the evidence he cites. The 21st-century destiny of the US, he predicts, is to follow the trajectories of 17th-century Spain, the Dutch in the 18th century, and 19th- and early-20th-century England. He predicts that by 2030 hegemony will have passed to central Asian powers comprising Russia, India, China, and Iran. On the bright side, he notes that after 40 years or so following the fall, US citizens will become content to live in a second-rate nation. A timely but pessimistic read. Summing Up: Recommended. General readers and professionals. — E. L. Whalen, formerly, Clarke College

Real world economic outlook: the legacy of globalization: debt and deflation, ed. by Ann Pettifor with Janet Bush.  Palgrave, 2003.  232p index ISBN 1-4039-1794-9, $75.00; ISBN 1-4039-1795-7 pbk, $24.95. Reviewed in 2004may CHOICE.
41-5410  HC59  MARC

This is the first of a planned annual publication, each with a different theme, addressing the global economy from, as stated on the book jacket, “a different, radical and more realistic perspective.” At a time when globalization and economic liberalization are universal buzzwords, this volume gives readers a reason to pause and think about the real meaning of globalization. Articles address a wide range of issues integral to the globalization movement, and this broad coverage is one of the book’s assets, offering something of interest to anyone concerned with the topic. Chapters on “making sense of our world” and “globalization and its consequences” are particularly interesting and well thought out. While the tone of all articles leans to the Left, the authors try to highlight issues that either do not enter mainstream dialogue or are not given a fair analysis. One drawback of such broad coverage is the lack of depth, particularly in the articles focusing on different regions. These articles read more like an op-ed piece than respectable academic writing. Overall a very good book, primarily to be used as a supplement to courses dealing with international economics or politics. Summing Up: Recommended. Upper-division undergraduates and above. — J. Raman, Valparaiso University

Sturzenegger, Federico.  Debt defaults and lessons from a decade of crises, by Federico Sturzenegger and Jeromin Zettelmeyer.  MIT, 2007 (c2006).  385p bibl index afp ISBN 0-262-19553-4, $45.00; ISBN 9780262195539, $45.00.  Outstanding Title! Reviewed in 2007nov CHOICE.
45-1582  HJ8899  2006-27582 CIP

Over the past decade, emerging market debt crises have challenged domestic policy makers and international financial institutions to develop mechanisms to avoid future crises. Sturzenegger (Harvard) and Zettelmeyer (International Monetary Fund) have produced what is undoubtedly the most thorough analysis of the causes and consequences of these crises. Their book’s first section provides a detailed historical overview of these crises, an economic analysis of sovereign debt, and legal issues associated with debt restructuring. The authors’ analysis of the evidence of the costs of default is an especially valuable contribution. The main focus is a series of case studies of crises in emerging markets, including Russia and Argentina, 1998-2005. In each of these, the tables on economic indicators, debt dynamics, and the extent of “haircuts” are extremely useful in interpreting the causes and results of defaults. The appendix is an exceptionally valuable addition; included are empirical measures such as solvency and liquidity indicators, debt dynamics decompositions, default probability estimation methodology, and estimating recovery values. As is the case with the entire work, this section is clearly written, technically accurate, and extremely useful for analyzing the likelihood and consequences of future crises. Summing Up: Essential. Economics collections, upper-division undergraduate through faculty/research. — D. C. Messerschmidt, Lynchburg College

The US national debt, 1787-1900: v.1: The first national debt; v.2: The first national debt (continued); v.3: The first national debt (continued) and the Antebellum debt; v.4: The Civil War debt, ed. by Robert E. Wright.  Pickering & Chatto, 2005. (Dist. by Ashgate Publishing),  4v index afp ISBN 1-85196-816-4, $670.00. Reviewed in 2006apr CHOICE.
43-4792  HJ8101  MARC

Wright (New York Univ.) has compiled a valuable four-volume collection of 26 tracts that examine changing American perceptions of the US federal debt from the late Colonial to the post-Civil War period. Much of the early debt literature criticized Treasury Secretary Alexander Hamilton’s successful financial program. Hamilton’s creation of a US central bank and his consolidation and refunding of federal and state debt were vigorously opposed by Jeffersonian Republicans. Yet Jefferson’s Treasury Secretary Albert Gallatin, in his 1801 Views of the Public Debt, Receipts, & Expenditures of the United States, reluctantly accepted the economic virtues of Hamilton’s banking and funding system, even though he blamed Federalist policies for dangerously rising federal debt. Additional topics covered by the readings include the antebellum debt, especially the perils and consequences of Jacksonian finance, and a variety of Civil War debt issues. Notable works in the collection are by Oliver Wolcott (1820) on currency, credit, and national industry; A. B. Johnson (1862) on gold, taxation, and debt; Samuel Wilkeson and Jay Cooke (1865) on the national debt as “national blessing”; and finally, in a 585-page tour de force, Bernard Cohen’s 1822 Compedium of Finance, a work that compared the US and international debt experience. Summing Up: Highly recommended. Strong economic history collections, upper-division undergraduate through faculty. — F. Petrella, emeritus, College of the Holy Cross

Warren, Elizabeth.  The two-income trap: why middle-class mothers and fathers are going broke, by Elizabeth Warren and Amelia Warren Tyagi.  Basic Books, 2003.  255p index afp ISBN 0-465-09082-6, $26.00. Reviewed in 2004jul CHOICE.
41-6660  HQ536  2003-10496 CIP

Mother-daughter authors Warren (Harvard Law School) and Tyagi present interesting and provocative findings about bankruptcy patterns in a readily accessible but authoritative and scholarly style. Their findings stem from the Consumer Bankruptcy Project of 2001, which interviewed families that filed for personal bankruptcy around the US. The authors argue that the rate of bankruptcy filings is rising, particularly for middle-class families, but not because of overconsumption, increased immorality, or reduced stigma, as other commentators have suggested. Rather, two-income families have driven up home prices in desirable suburbs, namely those with good public schools. Thus two-income families may actually have less discretionary income and less of a safety net of savings than one-income families had a generation ago. In addition, credit market deregulation has resulted in lower down payment requirements and greater access to unsecured but high-interest-rate credit. The resulting high-debt burden, combined with an unplanned but fairly likely event like serious illness, job loss, or divorce, leads perversely to greater financial vulnerability of two-income families than of one-income families. The authors advocate reregulation of credit markets and avoidance of high fixed expenses such as large house payments in response to this problem. Summing Up: Recommended. General readers; students, lower-division undergraduate and up; and professionals. –
 J. P. Jacobsen, Wesleyan University

Wright, Robert E.  Hamilton unbound: finance and the creation of the American Republic.  Greenwood, 2002.  230p bibl index afp  (Contributions in economics and economic history, 228) ISBN 0-275-97816-8, $62.95. Reviewed in 2003mar CHOICE.
40-4124  HG181  2002-27683 CIP

This provocative and well-researched work examines early American history from the standpoint of modern financial theory. In chapter 1 Wright (economics, Univ. of Virginia) uses cost-benefit analysis to explain the American Revolution. Restrictive British monetary policies increased Colonial interest rates. The resulting reduction in “capitalized values” of Colonial assets created “debtor angst” and eventually revolution since the “costs” of remaining in the British Empire far exceeded the “benefits.” In chapter 2 the author shows how the framers of the US Constitution promoted “checks and balances” by reducing information asymmetry and principal-agent problems through the devices of tripartite government, bicameral legislatures, executive veto, and judicial review of legislation. Chapter 3 examines the link between finance and economic growth. Alexander Hamilton’s brilliantly conceived financial system created economic growth and wealth when, according to the author, it was “combined with the property assurances supplied by a stable, nonpredatory government” as found in the Constitution. The remaining three chapters examine the role of banking in the 1800 election, the prevalence of the dueling institution in these states where credit worthiness depended more on honor and character than traditional loan criteria, and the evolution of financial markets and the subjugation of women. Summing Up: Highly recommended. Upper-division undergraduate through faculty collections. — F. Petrella, College of the Holy Cross

Wright, Robert E.  One nation under debt: Hamilton, Jefferson, and the history of what we owe.  McGraw-Hill, 2008.  419p bibl index; ISBN 9780071543934, $27.95.  Outstanding Title! Reviewed in 2008nov CHOICE.
46-1610  HJ8106  MARC

Wright (New York Univ., Stern School of Business, and the Museum of American Finance) provides a history of the origins of the US federal debt that should appeal to a broad audience. He writes in a lively narrative style, characteristic of good popular history. The book, however, departs from standard popular history in two directions. First, Wright integrates the evolution of the debt into a clear, compelling theory of economic development that focuses on the interaction between political institutions and financial markets. Second, his extensive analysis of primary sources on ownership and sales of government securities provides new insights about how active and widespread the market for government debt was in early America. The final chapter provides a quick summary of the development of the debt since the late 1830s and suggests reasons why the national debt may no longer play the positive role for economic development that it did early in the nation’s history. Economic historians will not find formal models or econometrics, but will find a well-told story, informed by economic theory and backed up with nearly 50 pages of tables and graphs. Summing Up: Highly recommended. General readers; students at all levels; researchers and faculty. — B. A. Hansen, University of Mary Washington