A Canadian Perspective

THE FRAGILE MIDDLE CLASS: AMERICANS IN DEBT. By Teresa A. Sullivant^, Elizabeth Warren^^ & Jay Lawrence Westbrook^^. New Haven: Yale University Press, 2000. Pp. xvii, 380. $35.00.^^^^ I. Introduction I feel a very special pleasure and privilege in having been invited to participate in this Seminar. It is a pleasure because I have long admired the authors' pioneering work on the sociolegal aspects of consumer bankruptcies and the workings of the American bankruptcy system, and not least because they have done so with great style, verve, and literacy. It is a privilege because only great kindness could have persuaded the organizers of the Seminar to invite an emeritus academic from another country, who is neither an economist nor a sociologist, and knows very little about American insolvency law, to presume to offer comments on so complex an area of consumer bankruptcies as is addressed in The Fragile Middle Class. And indeed, I am not even going to try. It does seem useful, however, for me to offer some comparative observations because the United States and Canadian consumer bankruptcy regimes share many common features. Canada has the dubious distinction of being second only to the United States in having the highest number of consumer insolvencies in the Western hemisphere and the second highest rate per population.' So it is of more than passing interest to know whether the authors' thesis also applies to Canada. That thesis falls into two parts. The first part is that consumer bankruptcies in the United States are predominantly a middle class phenomenon. The second part is that the principal causes of consumer bankruptcies can be traced to unemployment and downsizing, medical bills and other effects of significant illnesses, broken families, burdens of home ownership, and the transforming effects of credit cards as the newest form of consumer credit. The first part of the authors' thesis does not, contingently at least, apply to Canada. The second part does and does not, depending on which causative bankruptcy factor is being discussed. II. Methodological Difficulties Before expanding on these conclusions, I must allude to important methodological difficulties in comparing the survey results discussed in The Fragile Middle Class with the results of Canadian empirical studies. Sullivan, Warren, and Westbrook were fortunate to be able to replicate their own study ten years apart, using the same methodology, and are therefore able to write confidently about the reliability of their data. The same claim cannot be made for Canada. Since 1982, three major studies and a smaller empirical study3 have been completed by different hands in the United States's northern neighbor. Unfortunately, each of the major studies has its own distinctive features and uses a different methodology. Brighton and Connidis (1982)4 examined a random sample of 1,509 geographically balanced consumer bankruptcies across Canada by consulting the files kept at the Office of the Superintendent of Bankruptcy (OSB) in Ottawa. Schwartz and Anderson's investigation (1997)5 was sponsored by the Office of Consumer Affairs of Industry Canada and involved collecting information across Canada from Canadian trustees6 about potential bankrupts who had consulted the trustees about their debt problems but had not yet made a decision. lain Ramsay's study (1998)' was an independent scholarly enterprise and involved the culling of data from 1,147 randomly selected bankruptcy files in the Toronto Bankruptcy Office.' Finally, the smaller study previously referred to, again officially sponsored, was a 1994 follow-up on the Brighton and Connidis study although most of the results were not published until 1999.9 The type and amount of data collected in these four studies varies considerably and is often not comparable. In the critically important area of the causes of bankruptcy, results usually reflect the trustee's assessment of the debtor's answers, and there is mostly no independent verification of the answers. …

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