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As someone who studies the social life of financial instruments, I have a few thoughts about how this piece characterizes progressive critiques of new financial instruments as closed minded and reactionary. 1/20 https://www.washingtonpost.com/opinions/income-share-agreements-are-a-powerful-alternative-to-student-loans/2019/11/27/5290d0ee-0be3-11ea-97ac-a7ccc8dd1ebc_story.html
That framing only makes sense if you ignore the long history and current reality of racial & economic exploitation in financial markets.
If you take social context into account, then skepticism about new financial instruments is reasonable and necessary. 2/20
If you take social context into account, then skepticism about new financial instruments is reasonable and necessary. 2/20
Lets start with securitization. It was widely hailed as the "democratization of credit" . . . right until the 2008 crash revealed how securitization-fueled subprime loans were disproportionately given to people of color. 3/20 https://journals.sagepub.com/doi/10.1177/0003122410380868
Or we can talk about how reverse mortgages are stripping homes and wealth from predominantly African American homeowners. 4/20 https://www.usatoday.com/in-depth/news/investigations/2019/06/11/seniors-face-foreclosure-retirement-after-failed-reverse-mortgage/1329043001/
401ks promised choice and flexibility . . . and then shifted market risks from employers to workers. 5/20 https://www.vox.com/2019/3/27/18174385/retirement-savin
In fact, the shift of economic risks onto the little guy is arguably one of the defining features of contemporary life. 6/20
https://policalscience.yale.edu/publications/great-risk-shift-new-economic-insecurity-and-decline-american-dream
https://policalscience.yale.edu/publications/great-risk-shift-new-economic-insecurity-and-decline-american-dream
Financial markets make incredible profits. This is also an essential context for making sense of the introduction of new financial technologies. 7/20 https://journals.sagepub.com/doi/10.1177/0003122411414827
There are other reasons to be cautious. New technologies can discriminate. 8/20 https://www.amazon.com/Race-After-Technology-Abolitionist-Tools/dp/1509526404
Credit markets can discriminate. 9/20 https://www.annualreviews.org/doi/10.1146/annurev.soc.33.040406.131740
Risk assessment algorithms can discriminate. 10/20
https://science.sciencemag.org/content/366/6464/447
https://science.sciencemag.org/content/366/6464/447
Nothing about the Great Depression seems to have changed the underlying social dynamics that support deregulation or benefit Wall Street. 11/20
https://www.amazon.com/Strange-Non-death-Neo-liberalism-Colin-Crouch/dp/0745652212
https://www.amazon.com/Strange-Non-death-Neo-liberalism-Colin-Crouch/dp/0745652212
Using credit and financial provision as a form of social policy can reinforce, rather than disrupt, existing inequalities. 12/20 https://www.stanfordlawreview.org/print/article/rethinking-credit-as-social-provision/
This context means that suspicion of new financial instruments is not a knee-jerk or unfounded reaction. It is a reasonable response to the world we live in.
13/20
13/20
The burden of proof should be on advocates of new financial technologies to show how this time is different. 14/20
You want me to like ISAs? Then show me you understand the larger context of financial exploitation and understand how this tool fits into that pattern. 15/20
You want me to trust that ISAs will, over the long haul, shift risks to lenders? Then explain to me how you will prevent this instrument from becoming a tool of wealth extraction in the future. (Assuming that's not the actual goal, which it could well be). 16/20
You want me to embrace ISAs? Then make a stronger case for why higher education should be framed as a problem of financial provision. 17/20
I'm not against all new financial technologies or all forms of finance. People need access to money and credit on fair terms. 18/20 https://www.russellsage.org/publications/credit-where-its-due
But we must demand a real consideration of the social context in which these technologies are deployed. And we need strong Consumer Financial Protection Bureau that can oversee all such instruments on behalf of consumers and borrowers over time. 19/20
So I am willing to talk about ISAs. But I make no apologies for approaching them with a critical eye. We all should. 20/20.
* more relevant readings here https://twitter.com/seattlesquinn/status/1202030202634854400
