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I disagree with the premise of the article. If someone has negative assets, they are poorer than people with zero assets. The article paints access to credit as

I disagree with the premise of the article. If someone has negative assets, they are poorer than people with zero assets. The article paints access to credit as a form of wealth, which it is, but in the end wealth is measured by accumulated assets, as a proxy indicator for earning potential. If you use credit to acquire assets, real estate for example, you won't move the needle on your total net worth. So, the overindebted in the US are those who used credit for expenses or for failed investments. They are poorer than those with zero debt. The only exception that I can see, and which the article does not mention, is the use of credit for acquiring untangible assets, such as education. The correction would be to measure earning potential per individual, instead of net-assets, but that is basically impossible at large scale. We are stuck using net assets as a proxy for earning potential. Sum of wealth is an acceptable measure of income inequality.

maratc 5y ago
> So, the overindebted in the US are those who used credit for expenses or for failed investments. They are poorer than those with zero debt. Someone who owns a $200,000 house (and a mortgage of $210,000) is poorer than someone who has no house? Someone who took a $50,000 loan for a new car and drove it for one day, technically lowering its price to $45,000, is poorer than someone who has no car?
hnbad 5y ago
It's worth noting that Eike Batista, whom the article mentions as an example for someone "anybody trying to get by on less than a dollar a day" would "happily change places with" had most of his assets seized a year after the article was written and was recently sentenced to 30 years in prison. Additionally Jérôme Kerviel's €4.9 billion fine was reduced to $1 million two years after the article came out but he served five months in prison the same year the article was written. The article's framing implies that these "debt billionaires" significantly impact these statistics but doesn't demonstrate whether this is the case by contrasting them with other measures, only making vague comparisons between American and Chinese "savings relative to household income". But arguably a debt-free Chinese person with modest savings is less poor than a working class American with debts they can barely afford paying the interest on because the latter is practically living under indentured servitude.

maratc 5y ago

> So, the overindebted in the US are those who used credit for expenses or for failed investments. They are poorer than those with zero debt. Someone who owns a $200,000 house (and a mortgage of $210,000) is poorer than someone who has no house? Someone who took a $50,000 loan for a new car and drove it for one day, technically lowering its price to $45,000, is poorer than someone who has no car?

hnbad 5y ago

It's worth noting that Eike Batista, whom the article mentions as an example for someone "anybody trying to get by on less than a dollar a day" would "happily change places with" had most of his assets seized a year after the article was written and was recently sentenced to 30 years in prison. Additionally Jérôme Kerviel's €4.9 billion fine was reduced to $1 million two years after the article came out but he served five months in prison the same year the article was written. The article's framing implies that these "debt billionaires" significantly impact these statistics but doesn't demonstrate whether this is the case by contrasting them with other measures, only making vague comparisons between American and Chinese "savings relative to household income". But arguably a debt-free Chinese person with modest savings is less poor than a working class American with debts they can barely afford paying the interest on because the latter is practically living under indentured servitude.