Pound Foolish

The takedowns of various financial “experts” are fun - if you just read one chapter in this book, make it chapter three, “The Latte Is a Lie,” which is all about how cutting out your Starbucks run every day won't make you a millionaire and a lot of people are making big money by shaming regular people about things like that. The real problem is stagnant wages combined with skyrocketing costs for things like real estate, healthcare, and education, combined with a massive reduction in the societal safety net. People can't save as much because they're essentially trying to do more with less. I feel like since this book came out, a lot of what's in it has become almost common knowledge, or maybe that's just that I'm friends with a lot of frustrated millennials. Either way, this was easy to read and definitely educational, though there was a lot in here that I was already aware of. And now I still have no idea what a variable annuity is, but I know I shouldn't get one.

Fantastic. And important. It kills me that people don't educate themselves enough about this. This is a deeply pleasurable excoriation (yes, OK, sounds gross) of the inherently flawed personal finance industry. That is, the commodification of... money? The way that a combination of 1970s self-help trends with American individualism and the near-constant attack on and retreat of any form of social welfare in America has led to everyone (1) being a lot poorer, and (2) feeling like it's all their fault.

Featuring the work of many of my fave people in both economics research (Sendhil Mullainathan, Richard Thaler, Antoinette Schoar) and politics (Elizabeth Warren), with cameos from some other hell-raising notables (Barbara Ehrenreich, Cornel West), the author, Helaine Olen, builds up a strong argument: as employer-provided pensions disappeared from American industry, as Social Security dried up, and as everything got replaced by 401ks and Individual Retirement Accounts (IRAs), two things happened. First, disguised as deeply American individualism, people were encouraged to “take responsibility” over their finances: saving diligently, investing wisely, and reaping the benefits. This is the old “if you're poor, it's your fault” argument. Second, an entire industry of quacks and charlatans was established to guide us and judge us on how we're not saving enough, or investing in the right way, or whatever.

And, meanwhile, the elephant in the room: that even the most Frugal Angela's diligent 401k would never have survived the tanking stock market of 2008, or the spasms of a contracting American economy (with its attendant job loss and slow recovery). I especially loved Olen's chapter on “women and money”: the story women are told is that they're highly emotional, irresponsible spenders who can't possibly understand complex financial products like an annuity, and must thus be guided through the personal finance thicket by a (male) adviser (for a price, of course). Meanwhile, all the data points to the opposite: men are more emotional about their money, trading stocks based on feelings, spending more, and so on. The real reason women often have less money than men (as Olen states, but SHOULD BE OBVIOUS): THEY EARN LESS THAN MEN FOR THE SAME WORK. For the love of God. Olen's blunt, obvious prescription: instead of telling women they're too weepy to understand an index fund, maybe we should be lobbying for gender equality and eliminating the gender wage gap!?

And there is more of this ilk. So, ultimately, a great book for this female economist called Frugal Angela, but also a great book for broader social issues of politics, income inequality, and our future. Oh yeah, and the only safe bet in navigating these stormy economic seas: buy bonds.