The Magazine

Elizabeth Warren, Closet Conservative

The most misunderstood woman in Washington.

Aug 1, 2011, Vol. 16, No. 43 • By CHRISTOPHER CALDWELL
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President Obama’s nomination of former Ohio attorney general Richard Cordray to head the new Consumer Financial Protection Bureau may finish off the brief political career of the most eccentric and poorly understood figure of the finance crisis. It was Harvard law professor Elizabeth Warren who dreamed up the CFPB in 2007, and it was she who spent the past year running it. Now she will return to Cambridge, either to teach or to run for Senate against Republican Scott Brown.

Obama and Warren Photo

Obama and Warren: Thanks, you can go now.


It is not surprising that Warren found no place in Washington. The cameo role she played on the national stage made her an idol to the leftmost part of President Obama’s coalition and a hate object for conservatives​—​and yet her understanding of the financial crisis is best described as populist, conservative, even right-wing. It arises from what has happened to the American middle class in the past four decades. 

Warren’s Harvard affiliation is something of an incognito. By her own account, she comes from an Oklahoma family whose only claim on the adjective “middle class” was its avoidance of the word ain’t. When she was 13, her father, a maintenance man, had a heart attack and had to stop work. Her mother got a job in the catalog-order department at Sears until he was well enough to return. Going bust was something her family narrowly avoided. Warren has devoted the last decade of her career to explaining why those who wind up in similar positions today are seldom so lucky.

In 2003 Warren cowrote a brilliant and counterintuitive work of pop economics called The Two-Income Trap. People were going bankrupt at an alarming rate. Since the 1990s, more children had experienced their parents’ bankruptcy than their parents’ divorce. And yet the economy was booming. So senators like Orrin Hatch seemed to be on solid ground when they attributed these bankruptcies to people who “run up huge bills and then expect society to pay for them.” Warren herself later said she was looking for some failure of self-control, for “too many Gameboys.” But this was not the case. Bankruptcy was actually getting harder to declare, Warren proved. For bankrupt families, the ratio of nonmortgage debt to income rose from .79 in 1981 to 1.06 in 1991 to 1.5 in 2001. To quote, italics and all, the most stunning line in her book: “Having a child is now the single best predictor that a woman will end up in financial collapse.”

Why this was so had nothing to do with consumerism. Parents spent 32 percent less on clothing, and 52 percent less on appliances. What they spent more on was big necessities: mortgages (up 76 percent), cars (up 52 percent), taxes (up 25 percent), and health insurance (up 74 percent). And the reason for all but the last of these was the entry of women into the workplace. Working mothers “ratcheted up the price of a middle-class life for everyone, including families that wanted to keep Mom at home,” Warren wrote. As a result, she showed, two-income families have less disposable income than one-income families did in the old days. What is more, today’s families are deprived of a safety net​—​a spare worker​—​of the sort her own family was able to lean on when she was a child. If anything goes seriously wrong in your average two-earner family today, they are in grave financial jeopardy.

You can euphemize this account any way you like​—​and God knows Warren tries​—​but Michele Bachmann would find nothing to object to in this narrative. It is a straightforward telling of the Tragedy of Feminism, tinged with populism. Warren’s explanation for exploding real estate prices involves white flight: “As families saw urban centers as increasingly unattractive places to live,” she writes, “the range of desirable housing options began to shrink and parents’ desire to escape from failing schools began to take on new urgency.” She complains that the federal safety net “serves only one segment of the population: the poor. .  .  . But what about the middle class? What is their safety net?” She calls for school vouchers. At times, her complaints on behalf of the middle class sound positively Nixonian.

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