President Obama today nominated former Ohio Attorney General Richard Cordray to be director of the Consumer Financial Protection Bureau. We caught up with Elizabeth Warren – the woman whose idea the bureau was, and who has helped set up the agency – to get her thoughts in something of an exit interview (though she isn’t leaving immediately).
WARREN: I think the part I’m most proud of is that we took an idea that said there’s a system out there that’s broken –- there are 19 federal statutes administered by seven different agencies; everybody’s responsible and therefore nobody is responsible to the American consumer, no one is looking out for American families. And we took an idea and said, "You know what we can do? We can be more efficient, we can be cheaper, we can be more effective if we put this into one agency and then hold them accountable for getting the job done." We’ve started that. We’re under way.
Efficient markets depend on simple, clear signals and information. Convolution only increases bureaucracy and makes room for fraud. At the outset, I applaud Warren's goals.
But then I wonder how she resolves what I consider to be the cognitive dissonance of her writing about the middle class:
The upshot is that two-income families often have even less income left over today than did an equivalent single-income family 30 years ago, even when they make almost twice as much. And they go deeper in debt. The authors find that it is not the free-spending young or the incapacitated elderly who are declaring bankruptcy so much as families with children. ... their main thesis is undeniable. Typical families often cannot afford the high-quality education, health care and neighborhoods required to be middle class today. More clearly than anyone else, I think, Ms. Warren and Ms. Tyagi have shown how little attention the nation and our government have paid to the way Americans really live.
Source: Economic Scene; Necessities, not luxuries, are driving Americans into debt, a new book says. - New York Times
For surely it could not have escaped a person of Ms. Warren's talents that all of the sky-rocketing costs she cites are entirely controlled or directly delivered by a large government which is by any measurement growing faster than society can afford.
The dissonance is compounded by the fact that the private sector has produced lower prices in everything else. Perhaps most importantly, the mess she is determined to clean up is absolutely the product of meddling politicians.
I would love to hear her thoughts on the matter.