Debt and character

Mark Vernon asks:

What does living in a debt culture mean at a more personal level? What is the impact on the sense of morality and self-worth of a society that is sinking into debt, where debt is institutional and systemic?

I'm not sure it means much at all, for three reasons:
1. Debt isn't that high. Britons owe £222.1bn in non-mortgage debt. Yes, this is roughly equivalent to three months post-tax income.  But it's less than a quarter of the money we have deposited in banks and building societies (table A4.1 here). And much - most - of this debt will have been taken on rationally; in the days when you could get six months interest free debt, it made perfect sense to max out your credit card to pay off a bit of the mortgage.
2. Debt is a sign of confidence in future prospects; people take it on, believing they'll be able to repay it - which most do: personal insolvencies have been falling recently.  Surely, such optimism is preferable to a climate of fear and uncertainty, in which folk are scared to borrow.
3. Debt is really rather mundane. It's just a form of transport - a way of moving  one's spending power from the future to the present. Interest is just what you pay the lorry driver for this transport. Why should such dull transactions be morally or socially significant?
And herein lies a puzzle. On the one hand, it seems - with hindsight - that one of Marx's errors was to over-estimate the extent to which a person's work determined their character. But it's a common trope amongst critics of capitalism - for example, Jeanette Winterson here, critiqued by Julie Burchill - that shopping and spending does influence character. But how can this be when we spend so much less time spending money than we do at work?

Comments

[Luis Enrique]

I'm glad you highlight the Winterson and Burchill arguments. What really gnashes my teeth about articles like that Winterson one is that when she bangs on about how lovely it is to buy hand-fired dinner plates, she doesn't think at all about the cost of those plates versus Ikea, and yet I imagine people who think of themselves as left wing nodding along to her article. Yes, that's what the workers need, massive real price rises in staple goods! (maybe I should stop driving myself mad with imagined straw man Guardian readers).

And as Burchill gets at, do we really want to live in an economy where every third person works in a little shop, or driving the new fleet of delivery vans needed to stock them, (both modes of employment being famous for shit wages). And does she imagine that in each shop we'd all be greeted by rosy-cheeked craftsman eager to wax lyrical about their hand-finished locally sourced baked beans or whatever?

The puzzle, as you might put it, is why the left wing has become associated with hogwash like Winterson and Tesco defenders are usually taken as right wingers? I don't know Mark Vernon and your link isn't working for me, but do you think that worrying about debt is another inexplicable left wing predilection? Perhaps not; right wingers may think debt is a primarily a symptom of lamentable irresponsibility.

[Darkling]

I don't think Burchill's article deserves the description of argument. Reactionary classist character assassination, certainly.

Last time I looked, I didn't think dinner plates were as a matter of course broken during meals.

[chris]

Luis - the link's fixed (I hope!).

[Shefaly]

"... shopping and spending does influence character. But how can this be when we spend so much less time spending money than we do at work?"

I think those who shop and those who spend a lot of time at work are two mutually exclusive groups.

In my experience, when I have money, it is because I am working overtime on client projects and therefore have no time to spend it; and when I have time, that is I am not on projects, I have no money to spend (Well, I do, from earlier busy periods but I do not want to waste it buying things that are neither pretty nor functional apart from useful for passing time which I should really spend on more business development, professional development or catching up on backlog of films missed).

On debt, averaging it per capita sort of misses the point. The most unsecured debt is carried by those whose financial literacy is questionable and at whom the loan consolidation products are targetted. These same people may lose the plot and their house, which they have gained securedloans on, in one fell swoop.

There may be nothing character-shaping about shopping but losing one's house is pretty character-altering I imagine.

PS: Got here from Jostamon.Wordpress.com

[Luis Enrique]

Ah right I see. I wondered why I was experiencing a crisis of authenticity. Must be the credit card.

(actually, the link still gave me a 403 error, but I took the daring step of using google to find the post in question)

[Philip Hunt]

"Debt is really rather mundane. It's just a form of transport - a way of moving one's spending power from the future to the present. Interest is just what you pay the lorry driver for this transport. Why should such dull transactions be morally or socially significant?"

Because some people love to imagine that they are morally superior to others.

[Matthew]

Surely what matters about debt is the distribution?

I think it's fair to say a society where 10m people owe £5,000, and 1m people have assets of £50m, has a more of a 'debt culture' than one in which everyone has zero savings?

[a very public sociologist]

Just to be a pedant, Marx didn't say work determined character. He did say social being conditions consciousness, which is much looser and wide-ranging and, as far as I can tell, remains as much a truism today as it did then.

[Shuggy]

Journos and politicians who whine about people getting into too much debt are the sort of puritans that spend their lives terrified that there are people having more fun than they are. You understand this - this is amongst the reasons why people like your blog.

[Sam Z.]

To partially defend Winterson, it does appear to be the case that Britain has more of a chain store culture than many European countries. I don't have any hard evidence of this, but on frequent trips to Germany it's hard not to notice that there are many, many more independent bakers, delis, wine shops etc. often selling local stuff. (There are also big chain supermarkets, but the point is consumers seem to frequent both kinds of shops.) Germany is not a country where the poor live any worse than in the UK (by most accounts, they live better). Nor is it the case that these local shops are somehow exclusive or pretentious. So it does seem to be the case that you can have small, local, non-chain and affordable all at the same time.

[reason]

Matthew got it right. Once again aggregate statistics are not particularly useful. It may be that debt is not a problem in Britain, but I think it definitely is in the US, their trade deficit is simply unsustainable and with baby boomers retiring soon, the timing couldn't be worse.

[Real information about Debt Consolidation at All About Debt Consolidation]

Tax refund: Do you typically get a large tax refund each year? If you do, then you can apply part or all of the refund to your debts. In addition, you should adjust your withholding so that less taxes are withheld from each check; you’ ll get a smaller income tax refund, but you’ ll have more money to apply towards your debt payments each month. The last thing you want to do is give Uncle Sam an interest free loan when you have high interest credit cards!

[Mark Aucamp]

Great Post. I found your articles especially useful and I will return as the content was excellent!

[Debt Payoff Calculator]

Not sure how Europe's debt compares to that of people in the States but it is way too high nonetheless. Leveraging our global viability for cheaper dinner plates at IKEA I think...

[Philip McClarence]

YOu have made some excellent arguments and raised some good points. It is important not to give in to the blind panic that the media would often have us believe in.
On the other hand, I think it is important to remember that there are an increasing number of people (even if it's a small percentage) that are in real trouble with debt and this is only going to grow if things continue as they are.

[Harp refi]

Very Useful post, I didn't know that, keep up the good work! We are all victims of the "consumer mentality". I think thta's why all thes credit and debts problems in the USA and Europe occur.