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9/27/10

American Middle Class and Debt

The deception of debt...

When I was growing up and lived in a British society, the middle class abhorred debt, it was to be avoided at all costs. Indebtedness was considered the weakness and downfall of the upper classes, the aristocracy and the rich. In that era (I'm referring to the fifties and sixties) the wealthy were notorious for carrying way too much debt to keep up the appearance of a lifestyle that did not match their incomes. The middle class were too sensible for that and intolerant of the wealthy for their foolishness with money. Americans in general prior to post-WWII felt pretty much the same way, primarily because they did not have access to credit. Many of the Founding Fathers were debt-ridden because they considered themselves to be "gentlemen" and were competing with the Lords of England and more than a few fell into a trap and hard times due to it.

The availability of "buying on time" after the second World War was purposefully intended to get Americans to end their conserving, thrifty, saving habits to stimulate the economy by turning them into consumers. Since many of the newly manufactured goods, cars, washing machines and the like, as well as cookie-cutter houses, were priced at high markup to boost businesses bottom line, most Americans couldn't afford to pay cash for these items. Business and government was not prepared to wait for people to save and thus the era of "buy now, pay later" was born. The cycle of stimulating business profits by pricing planned obsolescence products highly, lending consumers money at interest and trading in those products when they wore out for more credit, was born.

There is nothing wrong with wanting a more comfortable life, with possessions that make daily living easier or aspiring to a higher standard of living. The problem seems to have become matching what one would like and the ability to earn the money to pay for it, as well as the unbecoming trait of placing undue importance on the appearance of being wealthier than you are. It is also an ethical problem if you assume more debt that you can reasonably be assured of your ability to repay. There is also the character issue with the expectation that material goods will fulfill human needs and desires that in reality, only non-tangible things can fill. A society becomes void of character when people seek happiness primarily in consumer goods and diminishes the value of good character, education, virtue, ethics, knowledge, interesting conversation as things that also can be enjoyed to enrich itself.

Debt appears to be an American institution from the beginning and everyone has to make their own decision about their use of it. Debt has now become a way of life that has led to a gigantic economic crisis, requiring a long period of deleveraging, that is affecting society as a whole. From this point forward credit and indebtedness should be taken more seriously before it is undertaken. Those that take on too much debt and especially those that have repudiated it, regardless of circumstances, should be disdained. Whether a large segment of the American population has the character or will to do that remains to be seen.

A significant portion of the American people need to take a long, hard look at themselves and adjust to a way of life that is not filled with all the articles that are "buy now, pay later," because the cost later is far more than just owing money. It is at a cost to the heart and soul of what America is really about and risks what this country is supposed to be and for what it stands for.