Debt is central to most Americans’ life experience. We obtain housing, education, transport and medical services through our access to credit — and as such we spend most of our lives deeply indebted. How dispiriting debt is; it gnaws at us, this non-dischargeable burden.
But most Americans begin life woefully undercapitalized for the life we lead — we are unable to purchase homes, raise families, provide for medical care or retirement, or even buy cars and refrigerators, from our own resources. Rather, we stealthily borrow to enjoy “basic” requirements, taking comfort, I suppose, in the notion that everyone does it. And Americans are, of course, rich. The life cycle of most Americans involves getting a job and then using one’s anticipated future income to access credit, which is then used for obtaining life’s necessities (and then some). The resulting debt persists thereafter; we no longer celebrate paying off mortgages, we refinance and extend up through the hour of our death.
The economy thrives when we take on debt. Indeed, assuming our fair share of debt can be seen as an American duty. Without the fuel of debt (that is, without access to credit) the American economy can and will collapse. The ongoing economic malaise results in part from the deleveraging of American households, depressing our consumption. Consumer debt drives the American economy — America is built on debt.
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Debt is a larger phenomenon, of course, than our personal obligations. Our institutions are also indebted. Pity our “poor” universities, saddled by witless borrowings to pay for tony student centers, luxo-dorms, and pampered professors. Cities and towns cut back on public services as debt takes greater bites from budgets. States watch their credit ratings slide with each new social program. Indeed, a progressive’s take on the current budgetary stalemate (the proverbial Fiscal Cliff) involves a cynical embrace of public debt reduction by the “fiscal conservatives” in order to justify rollback of social entitlements.
The current financial stress has revealed all these points of weakness. And even at the highest level of social organization — the interactions among sovereign nation-states — we find debt everywhere. There is the unconscionable and unpayable debt owed by the world’s poorest countries; if any debt merits a Jubilee it is certainly this. But even rich countries (the United States first among them) are significantly indebted.
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debt is not a neutral social institution. It is first and foremost an institution allowing for the exercise of power. Debt is the foundation of hierarchy and hence much social structure. Its presence marks the divided spheres of our lives: between the “communist” family and small community domains where obligations reflect caring, resist quantification and meld into a richer cultural and moral life, and the larger, grossly more impersonal economy with its rigid demands.
