Debt has long been the nursemaid to the American Dream. When you consider that said dream consists of little more than the ability to buy lots of pretty, shiny things and to live for years mortgaged to the hilt, it's no surprise that we've internalised the idea that debt is like, well, mother's milk: Healthy finances requires a healthy dose of it from the start, we're told. Indeed, most of us think we are incomplete without debt.
It is therefore no surprise to read this report in The Wall Street Journal, about debt collectors and banks colluding to possibly defraud consumers by promising them credit cards if they will agree to pay back a portion of their debts. The WSJ article is provocative but fuzzy on the details, which you can see more of in this piece.
The point to note is not that financial agents are working together to bilk consumers of their money, which should hardly be a surprise to us, but that those upon whom they are allegedly preying seem to welcome the move.
The article gives the example of Thomas Carpenito who owed $10,000 in debt and promised to pay back $400 in exchange for a MasterCard. It's unclear whether that $10,000 was owed to one creditor or just one, and what the $400 went towards. But I'm less interested in those details than his response to finally getting a credit card (usually impossible for someone with his credit rating and debt): “'It was totally worth it,' he said. Having no credit cards made Mr. Carpenito feel 'like dirt,' he said, especially when out on dates.”
Similarly, Kindra Weaver, an office administrator in New Mexico, paid $300 without realising that it would go towards an old debt, and she is quoted as saying, "No one else wanted to even work with me...I lost my job at one point and couldn't make ends meet. But I feel so much better about my life now that I was able to pay and get back on track." Weaver's card carries an annual interest rate of 19%; the average rate, according to the WSJ, is 13.7%.
I was struck by how these consumers reflect a general and larger cultural idea about debt not as something that we could and should do without but as that which makes us whole and to which we have a moral and ethical obligation.
For both of them, getting these credit cards meant returning to a measure of financial security. None of us, at least in the U.S, can rent a car or engage upon any other significant financial enterprise without a card of some sort, so their relief and gratitude are understandable. But what is also clear here is the degree to which we invest debt with vast realms of social meaning and moral clarity. For Carpenito, not having a credit card – which is to say, having a means by which to accrue debt – was a matter of social stigma and left him feeling like dirt. In Weaver's case, she seems to equate paying back her debt as a moral imperative.
The Washington Post financial columnist Michelle Singletary has written about debt as a “moral obligation.” She may or may not be working off some interpretations of the Bible, which discuss debt in such absolute terms – although, interestingly, they also declare a seven-year moratorium on debts. And if you've ever been called by a debt collector, you know that they don't hesitate to invoke moral clarity and absoluteness in demanding repayment: you are a bad and dishonest person if you don't pay up.
Putting aside the separate issue of personal or private debt: When we consider all these varying declarations and injunctions next to each other, it becomes clear that the inability to have debt (to possess a credit card, for instance) is seen as a social failure and that the inability to pay it back is considered a moral failure.
But it makes no sense to think of debt in such terms when recent financial crises have in fact been created by the greed and the, dare we say, moral turpitude of banks and the collectors who hover around them like ambulance chasers. Yet, I'm also uneasy with replicating the the idea of debt as a moral failure or casting finance in such affective terms.
For that reason, I think it's worth considering the ways in which debt is inextricably woven into the fabric of American life such that its very existence is linked to the achievement of what are seen as the most significant mileposts in our lives including adulthood, citizenship, and a general and material sense of belonging in our worlds.
Consider the drive to own a house which, in the U.S, and in contrast to other places in the world, is considered a definition of adulthood. Consider the not very subtle ways in which renters (I am one) are denigrated as childish and impermanent residents who don't care about their neighbourhoods and are constantly pushed out by artificially constructed and bloated “housing markets” (the realities of which we are finally beginning to understand) which leave them scrounging around looking for cheaper rent.
Consider that a lot of people who “buy” dwellings really do nothing of the sort, and that many of them will eventually have to see banks foreclose on what they could never afford in the first place. In my own world, I know of a few who actually spent time doing the math and the research before they finally decided to buy a place or who made sure they had the resources to do so; most of them“bought” dwellings because they thought it was the adult thing to do and now, especially in an unsteady jobs market and a climate of layoffs, are left scrambling to make the mortgage every month. The same, of course, could be said for renters like me, but the difference is that my financial liability is less onerous on the larger system and is less likely to leave entire neighbourhoods so full of wastelands in the shape of uninhabited condo complexes like the one down the street.
Consider that the subprime mortgage industry preyed mostly on the poorest and most vulnerable among us, and that many of the borrowers were people of colour. Consider that most proponents of “housing markets” engage the terms of “desirable neighbourhoods” in heavily racist and racialised ways.
Consider this, stated as baldly as possible: That in an economy where home ownership is cast in such deeply racialised terms – in terms of who can buy and where – debt became a way to offer the false hope of citizenship itself.
Consider that debt is also linked to marriage, an institution fast falling into disarray among straight people but taken up enthusiastically by gays, who are always late to the party and happy to scrounge around for the rattiest favours. Among the arguments that gay marriage proponents make is that they will gain tax benefits. Conveniently forgotten in all this is that spouses also acquire their partners' debts.
Mainstream gays are still in their honeymoon stage with marriage. But give them a few years of learning about the economic costs of divorce – the bitterness with which people can fight over a $24.99 toaster, or a child, or a pet, has to be seen to be believed – and we are likely to see them leaving the institution in droves as well. Until then, debt will be considered a desirable symbol of marriage: “Until debt do us part.”
All of which is to say: Debt is constructed as a sign of maturity and responsibility and we have collectively bought into the idea that without it, we are nothing. But what if we rethought the meaning of debt and were more questioning about a system that insists on first making us immobile if we don't agree to accrue debt and then casts our failure to repay it in moral terms?
What if we understood that debt is not a moral failure but a social, economic, and political one?