By Chic Hollis – Philosophical Musings
In the social parlance about the dreary life of habitual drug and alcohol abusers, those persons who are not addicted but who assist the addicted in obtaining the objects that satisfy their uncontrollable urges are called enablers. These well-intentioned folks usually have a close daily relationship with the addict through which they help the addict hide the truth about his or her problem from casual acquaintances. Their reluctant tolerance of the addict’s repetitive self-abusive behavior is deemed by profession care-givers as counterproductive to the recovery of the individual addict.
Other less publicized enablers are the producers of alcohol, cigarettes, and addictive drugs, the legal or illegal vendors of these addictive substances, and the accommodating advertisers who promote some undefined “moderate” consumption level that invariably leads to addiction for certain personalities who are more susceptible to the effects of narcotics. The pattern of compulsive behavior exhibited by substance abusers and facilitated by enablers can be observed in other activities of questionable social value like gambling and shopping. Obviously, many peripheral enablers profit financially by the obsessions of those addicts who can’t control their impulses.
The most elusive enabler to enter the scene of exploiting the poor, the naive, and those without much self-control are the companies who issue credit cards. These commercial creditors are aided by clever advertisers who promote the products of a modern lifestyle, aggressive retailers who want to sell their fashionable merchandise, slick bankers who prefer processing debit cards to handwritten checks, and lax governments whose income tax codes permit businesses to write off their bad debt losses. The constant promotion of conspicuous consumption takes advantage of the minds of the those consumers who can’t resist the temptation of “having it all” because “they deserve it.” Many hard-working wage earners are induced into spending tomorrow’s income so that today they can have all the things that they and their families “must have.”
Promises, promises, promises form the superstructure upon which the credit pyramid is constructed. The worker promises his employer to work hard at his job; the employer promises to pay the worker promptly for the work done; the creditor promises to extend credit to the worker for a “reasonable” borrowing cost and renew the credit at maturity if necessary, and the worker/debtor promises to pay off the balance he owes plus any interest due according to the terms of the legal agreement between the creditor and the worker. This procedure sounds rather simple, and the worker is indeed benefitted by the immediate availability of cash, as long as he doesn’t lose his job and spend more than he can “afford.”
However, the temptation to spend more than a worker earns and has saved is always lurking, and the “urgent needs” of the worker and his/her dependants are always escalating. Maintaining a steady income depends on the employee’s health and age and the economic vicissitudes of the workplace. In an economic recession the worker can lose overtime pay or be laid off. When these factors negatively affect the worker’s income, it is difficult to maintain his worthiness for the credit line granted him.
The interest rates on unpaid balances and the penalties for late payments that are charged by the credit card companies today would have been considered usurious and illegal a few decades ago, when the maximum interest that could be charged on an outstanding balance was 12% APR. Today many credit card companies are charging double that interest rate to the customers they consider high risks: customers likely to pay late or default on their credit obligations. Generally, these customers have few assets and a poor credit history.
Young adults usually begin using a credit card with caution until they lose their job or face some extraordinary financial set-back. They promise themselves and their creditors, if they meet face to face, that they intend to pay off their past due amount as soon as they can. But who knows what’s going to happen tomorrow? Are they going to win the lottery, inherit some money, or sell some blood? The reverse of good fortune is more likely to befall them adding to their difficulties in making prompt payments and reducing their debt. So, the amount of debt is “ratcheted up,” and the fight over the worker’s income is intensified.
Everything people do in the economy puts pressure on the credit addict and those who haven’t exceeded their credit limit yet: increasing prices, changing styles (life, clothes, music, etc.), introducing new technology and upgrading older technology, advertising “improved” must-have products, increasing taxes, selling more insurance, traveling more often, following the right medical advice and taking the prescribed medicines while risking their side effects, eating more expensive health foods, seeking more donations to charity to help the poor and victims of some catastrophe, etc. These subtle and not-so-subtle suggestions become demands on us to keep up with our peer group and “do what’s right.” Discretionary spending is much easier with a credit card than going to an ATM machine for cash that may not be available.
Consumers feel the constant pressure to spend from advertisers, friends, and families. Our individual resistance depends on our upbringing and our personal desire to make others happy through our generosity. The appetite for overspending has been fostered by our state and federal governments. Government officials tell us that they are going to pay for all the things the government has promised to provide its citizens and those services citizens expect to have have but don’t have yet. Often these honest legislators forget to put something aside for the urgent improvements to crumbling public services like education and highway maintenance. But don’t ever increase our taxes!
With personal savings at an all-time low in this country, it is unlikely that the lessons of frugality can be learned by any other method than bankruptcy. Give the students loans so that they can pay the outrageous increases in college fees. Don’t ask anyone to explain why those fees have increased far beyond inflation. But don’t let those students off the hook via bankruptcy. They can’t thumb their noses at the Federal Government!
Today the credit card companies want equal protection from cancellation of debt via bankruptcy, even though they can deduct their loses from their taxes. In this economy, everyone has to have their cake and the opportunity to eat it at year end. The enablers must be enabled to be enablers, right?
The postponement of self-gratification is no longer a respectable virtue in our American society. Self-discipline is no longer expected from out youth. The lack of discipline in our schools is considered by the teachers themselves as the worse deterrent to providing a better education. So, without the enforcement in homes and schools of appropriate limitations to a child’s liberty, we are permitting our youngsters to abuse their freedom.
We have financially enabled them to satisfy their desires for the clothes, music, amusement, and lifestyles they choose. They have no sacrifices to make to obtain something, few serious obligations to fulfill, and no responsibilities to assume for their future. And these unfortunate young adults can come home after college or after a divorce and be financially supported by their parents or grandparents until they are once and for all kicked out of the nest.
It’s no wonder that the spoiled youth of today become the credit addicts of tomorrow and the adults who can’t manage their lives and finances. Parents, teachers, student loan facilitators, and credit card institutions have all become enablers. It’s the easy way out. Let tomorrow correct what we have allowed to happen today. Let the future generation correct our errant ways and hope that their offspring will somehow be able to pay off our debts.
We don’t need a twelve step Debtors Anonymous program to help us restrain our financial profligacy and cure our addiction to easy credit. We only need to learn that we shouldn’t buy things that we can’t pay for. Of course that lesson isn’t easy to learn when credit card companies are giving credit cards to college students and folks with poor credit experience. Keep the bars open all night like in England and the drinking problem will go away.
Easy credit may help stimulate consumption as Alan Greenspan well knows, but it doesn’t necessarily improve the soundness of the economy and the long term financial health of a country. The shadow of excessive debt hangs over our head like the shadow of global warming. Those disasters won’t happen during my lifetime, so why should I worry about it? I’ll let you.
(This musing was originally written in February 2005.)