When All Social Problems Become Financial Problems

Sarah Quinn –

When it comes to government programs, credit support is often cheaper and less controversial than direct expenditures. Understand this, and you can understand why government officials have an incentive to define all sorts of social problems as financial ones.

Government officials face considerable pressure to promote credit markets. Wall Street firms leverage money, expertise and status to “capture” regulators. It is not only the rich and powerful who make demands on the state for easier access to credit: Farmers in the late 18th century, black activists fighting against redlining in the postwar era, access to credit cards in the 1930s– all have demanded that the governmental help them gain access to credit. When wages are low and welfare state support is stingy, families rely on easy credit to ride out hard times or even meet daily expenses. In the context of neoliberalism, credit access can be a kind of destructive consolation prize for workers with stagnant wages and frayed safety nets, as other scholars have noted.

Demands for easy credit are a crucial part of the story of credit allocation in any political economy, but they do not tell the whole story. That is because lawmakers have their own reasons for turning to credit as tool of statecraft, and those reasons help determine how, when and why government officials move credit and promote financial markets.

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