The Culture of Debt

The Dinner and a Doc group watched James Scurlock’s Maxed Out this past Saturday night.  The film, which explores the problem of consumer debt in the United States, was released in 2005 to little fanfare, but has recently seen renewed interest in light of the role that consumer debt has played in producing the current economic climate.

The film effectively exposes some of the lending practices that either prey on borrowers or that provide them with access to more credit than they can actually service.  It does not always translate well into a Canadian context, since many of the practices that it criticizes are not legal in this country, but its central concerns about the consequences of too easily available consumer debt remain valid.  In particular, it draws attention to the difficulties inherent in the fact that lenders make more money from those who can only barely service their debt than from those who can pay down their debt quickly, where the ideal clients are those who are so indebted that they can pay only interest and can never actually eliminate their debt at all.  Since these are the economics of lending, even lenders who are not intentionally being predatory have a tremendous incentive to offer increasingly risky debt, especially when some of the risks of bankruptcy are mitigated by being able to sell bad debt to third party collectors.

While Maxed Out addresses these kinds of lending issues well, it does not really explore the role of borrowers in the problem of consumer debt, leaving the impression that borrowers bear little or no responsibility for their indebtedness.  The implicit assumption of many of those interviewed in the film seems to be that most people will simply use the maximum amount of credit available to them as a matter of course, that the majority of people cannot be reasonably expected to refrain from using credit once it is extended to them.

If this is the case, however, and I think that it may well be, it is a significant problem that deserves exploration in its own right, because it poses the question of why it is that the average person in North American culture is unable to manage their debt wisely.  The film offers only one part of an answer to this question, suggesting that lending institutions encourage indebtedness in order to maximize profit, but this encouragement amounts only to enabling behaviours that must find their impetus elsewhere.  To locate the sources of these behaviours, I might begin by looking in the following directions:

1. A culture of consumption that defines worth and status in terms of what we consume – I expose myself to debt because it buys me status in the eyes of those around me.

2. A culture of indulgence that celebrates excess and ridicules discipline – I expose myself to debt because it is easier and more socially acceptable to indulge my desires than to discipline them.

3. A culture of immediacy that cannot defer gratification – I expose myself to debt because I cannot wait until I can afford what I want through other means.

4. A culture of entitlement that believes it has a right to its lifestyle and its standard of living – I expose myself to debt because I believe that I deserve to have everything that other people have.

5. A culture of amusement that can only occupy itself through expenditure and consumption – I expose myself to debt because it buys the entertainment that removes the need for me to occupy myself.

6. A culture of expertise that recognizes only the work of the expert and the professional – I expose myself to debt because I have to hire experts to do what I am afraid to do myself.

7. A culture of possession that insists on private ownership – I expose myself to debt because I will not borrow, trade, or share.

8. A culture of independence that understands dependence on others as weakness – I expose myself to debt because I will not accept assistance from family and friends and community.

There are probably many other aspects of our culture that would help explain why we are so consistently irresponsible in our use of debt, but I think these are sufficient to demonstrate that no legislation will be capable of addressing these kinds of issues.  It may well be possible to legislate stricter lending behaviours, but there are no laws that will mitigate the social pressures that induce people to misuse whatever debt that is extended to them.

Once again, as I always do, I would suggest that the solutions to this problem are primarily communal and familial.  It is necessary for us to create families and communities and neighbourhoods that are alternative micro-cultures in the midst of a macro-culture that will always remain beyond our ability to change.  Rather than merely decrying the practices of lenders, we must find ways to encourage and support each other to live a different kind of economics, one that values what the community produces, one that affirms the role of sharing and borrowing, one that celebrates the amateur and the communal.  By removing the cultural pressures that encourage us to consume, we will also, I think, remove the pressures that encourage us to take on unnecessary debt.  This is not an easy task, of course, but it is one that will become increasingly necessary as the effects of our current economic situation become locally felt.

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