How a Nation of Workers Became a Nation of Debtors

Link: Union Card or Master Card -- How a Nation of Workers Became a Nation of Debtors | Corporate Accountability and WorkPlace | AlterNet.

Between 1970 and 2000, according to the Bureau of Economic Analysis of the Federal Reserve Bank, household debt relative to disposable personal income nearly doubled. In 2006, David A. Gaffen reported in the Wall Street Journal that "households'...debt-to-income ratio reached an all time high 131.1%." (Exploding public debt is an important component of this dynamic too. According to Federal Reserve Board data, between 1957 and 2007 the inflation adjusted total debt load per person in the US increased $145,432, equivalent to an increase of $581,728 per family of 4. That number, of course, does not include long-term costs of the war in Iraq or of ongoing taxpayer funded bailouts of financial companies.)

That debt is bondage is a profound moral truth. But it is an important shaper of political and economic consciousness as well. The more you are in debt, the less likely you are to rock the boat. Take on your employer? Go on strike? Risk your job by trying to start a union? What, and miss a credit card payment? Don't you get it? I'm maxed out. Risk getting my car getting reposed? You've got to be kidding.

Some of this attitude is quite conscious. Much of is more below the surface. Either way, this kind of debt profoundly changes many things including the relationship of the worker to the employer. It's one thing to "owe my soul to the company store." But this debt is different. This debt creates a mindset by which the paycheck and the employer who provides it come to be seen as a protector from the demands of the lender. It is the credit card company and the collection agency that become the greatest source of worry and harassment.

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But this arrangement changes politics too. Economically satisfied workers can "afford" political engagement on social issues such as gun ownership or abortion if they choose to be involved at all. And if you have a growing 401 K--which you have been led to believe is far more secure than Social Security--why wouldn't you have a literally "conservative" political outlook? Why not align with the politics that come with living in a "gated" community to defend against the less well off hordes? From that outlook, it's easy to imagine immigrants and/or "angry" African Americans as being seen as a much bigger threat than financial shenanigans on Wall Street. Thus are born "Reagan Democrats."

Moreover, from church, media and political pulpit alike comes a very sophisticated propaganda drumbeat. Relentlessly it pumps out the message that is that if you are on debt overload, you and you alone made bad choices. You didn't manage your money well. You should be contrite, even ashamed. The last thing you should do is think you have anything in common with any one else--even if millions are in exactly the same situation. Even less should you consider that you are a victim of extremely cynical and deliberate manipulation.

Did not the Credit Card Masters of the Universe barefacedly testify before Congress that it was they who needed protection from irresponsible borrowers? And did not a substantial majority of the "people's" representatives from both political parties in Congress agree with them? (As the righteous Elizabeth Warren has pointed out, those very same credit card companies routinely troll bankruptcy fillings to get names of bankruptcy filers to whom they then send credit cards solicitations! See here for terrific information on debt dynamics from Elizabeth Warren and her band of researchers. The New York Times recently published an excellent article on this subject as well.)

But credit card solicitations are not the only toxic Kool-Aid that's been on offer. The same institutions told us too that 401-K's are safer and better than either social security or a union negotiated pension. Why? Because private investments and personal responsibility are good and government and collective action are bad, that's why.

Comments

[Tom Smith]

Nice job. I found out about this because Gary Null is reading it right now today on his internet radio show on prn.org

[SplendidMarbles]

I think that the debt mess stems from several factors that reinforced one another. The rapid growth of the financial service industry - which forced deregulation and pushed securitization, our huge external deficits, which made it possible for us to borrow and spend, and stagnant wages due to a surplus of skilled labor - which caused wages to stagnate. Everyone lived beyond their means. No one wanted to stop spending. Now we are all paying for our reckless choices.