December 3, 2009

Pondering the idea of debt as moral failing

Posted in Consumer info, Musings at 5:17 pm by The Lizard Queen

This is one of those irregular verbs isn’t it? I am down on my luck, you are feckless, they are fraudulent money-grubbers.

—Katherine, from the comments thread for this post at Feministe

This SF Gate article, which I found via Crooks and Liars, gave me pause, less because the idea of deliberately defaulting on one’s mortgage payments came as a surprise (though it certainly did) than because of the candid way it discusses feelings of guilt, shame, and obligation that often come with financial distress:

The main point, he says, is that too often people’s “emotions” get in the way of clear financial thinking about mortgages, turning them into what he calls “woodheads” – “individuals who choose not to act in their own self-interest.” Most owners are too worried about feelings of shame and embarrassment following a foreclosure, and ignore the powerful financial reasons for doing so.

Buttressing these emotions is a system that White labels “the social control of the housing crisis” – pressures and messages continually sent to consumers by the “social control agents,” namely banks, government and the media. The mantra these agents – all the way up to President Obama – pound into owners’ heads, says White, is that “voluntarily defaulting on a mortgage is immoral.”

On a basic level, I think I understand how (uncontrolled/uncontrollable) debt and shame came to be intertwined.  When you borrow a book from the library, or a blouse from your sister, or cab fare from a buddy, you’re meant to return whatever it was you borrowed, otherwise you are, at best, kind of a jerk, and at worst, a thief.  That idea then gets transferred to more large-scale financial issues: if you borrow the money for a house from the bank, then you’re meant to pay it back, and if you don’t, again, you’re somewhere between a jerk and a thief, only many thousands of times over, given how much more a house is worth than a book or a blouse or a cab ride.

Except, of course, that such a basic blueprint for morality when it comes to material things tends to ignore people’s lived realities.  I know people who have had banks foreclose on their houses, people who’ve had to declare bankruptcy.  They’re not immoral, nor feckless, nor fraudulent money-grubbers.  Indeed, you might even say they’re simply down on their luck.

Furthermore, borrowing a book or a blouse or cab fare doesn’t usually come with exorbitant strings attached.  You give the book back when you’re done reading it, and if you lose it or ruin it you pay for a replacement.  You give the blouse back when you’re done wearing it, and if you lose it or ruin it you purchase or pay for a replacement.  And so on.  Yes, there are generally late fees associated with library books, but they’re not the kind that people go into real debt over.  (Usually.  There are always the folks who can’t go back to, say, Blockbuster because they accrued ridiculous late fees, but it seems like that’s a model companies are moving away from these days.)  Mortgages are a completely different ball game.  (“I’m going to end up paying HOW MUCH in interest??”)

In the end, I’m not really sure what to say about this whole idea aside from, “Huh.  That’s an interesting notion.”  Anyone else want to weigh in?

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