There’s No Such Thing as a Good Debtor

In the US, consumer debt is presented as a crucial rung on the ladder to a better life, a pathway to homeownership, and a good job. But most people never dig themselves out of debt, and the myth of the “good” debtor only conceals the crime of treating health care, shelter, and education as profit centers.

We are told that debt offers an opportunity to get ahead when, in reality, most people spend their entire lives stuck on the debt treadmill. (Flickr)

Our economy is built on lies. We are told that debt offers an opportunity to get ahead when, in reality, most people spend their entire lives stuck on the debt treadmill. Take out student loans to go to college so you can graduate and get a good job; borrow money so you can build your credit score and buy more stuff; take out a mortgage so you can become a homeowner; become an entrepreneur with a small business loan. Debt is presented as a crucial rung on the ladder to a better life, a stepping-stone to the American dream. If we can’t dig our way out of these “good” debts, we are to blame. But the fact is that most people can’t dig themselves out — three-quarters of people take their debts to the grave. On average, Americans die holding $62,000 of debt.

The capitalist fable of upward mobility has always been an illusion. While leveraging debt has lifted some out of poverty (access to credit was a cornerstone of policies that helped create the white middle class), the majority has been left behind or pushed into predatory contracts they can never escape. Debt, however, is more than a trap. It’s a form of social control. To give just one example, in 2019 the US Army actually admitted that they exceed their recruiting goals by targeting students in debt. As Army recruiting Command Major General Frank Muth put it, “One of the national crises right now is student loans, so $31,000 is [about] the average. [. . .] You can get out [of the Army] after four years, 100 percent paid for state college anywhere in the United States.” To be indebted makes us vulnerable to predators of all kinds, including predatory lenders, predatory debt collectors, and predatory military recruiters.

In myriad ways, debt erodes our freedom and forces unbearable choices on us: Should I pay my mortgage or pay for my chemotherapy? Should I take out loans to pay for college or enlist in the army to get financial aid? Should I put the groceries on a credit card or be late with rent? Should I go to a payday lender or sleep in my car? We internalize the narrative that we have taken on debt freely and the burden is ours alone to bear when nothing could be further from the truth.

To be indebted is typically a shameful experience. We are hounded by collectors via telephone and mail, our credit scores plummet, and, along with them, our chances for housing, loans, and even employment. Our self-esteem, self-worth, and physical and mental health take a dive, too. Being indebted weighs on the body and the mind, stressing us out and making us ill. That’s not an accident.

A loan is a weapon for making us feel powerless. Mortgages are a good example. In 1914 Ford Motor Company embarked on a new experiment that gave it nearly dictatorial power over its workers. Henry Ford created his own secret police force and gave it the Orwellian name “Ford Sociological Department.” The job of this department was to spy intrusively on factory workers and their families to make sure they were sufficiently conforming to Ford’s ideas about the American way of life. This meant an emphasis on thrift and upright moral living (no gambling and certainly no political agitating). Among other things, they wanted to know how much money each worker had saved, in which banks, how much debt they owed, and to whom.

The investigators especially discouraged renting out rooms, even to recent immigrants who were also working at Ford, and pressured employees to buy their own homes and helped them find a mortgage. Why would they care about this? What difference did it matter to management if their employees rented or owned a home? First, they discouraged taking on boarders because, despite the gospel of thrift, they didn’t want the workers to have additional sources of revenue. They wanted workers to be completely dependent on the income from their factory job. They also discouraged workers’ wives from working for money, both to serve the ideal of a lone male breadwinner and to make the entire household dependent on a single factory income.

Second, forcing people into mortgages made them docile workers, unlikely to join a labor strike or cause trouble because doing so might jeopardize their ability to pay their mortgage. Anyone who didn’t conform to the Ford Sociological Department’s strict standards could have their pay docked and be placed on probation until they “turned their lives around,” or they could be fired outright if they resisted this control over their daily lives. Mortgage debt meant that Ford could take away more than just workers’ jobs — he could threaten their shelter, too.

Today our privatized health care system serves a similar function, even if it is less explicit. Linking medical coverage to employment keeps workers docile and forces unions to spend more of their resources fighting for adequate and affordable health care instead of higher pay, shorter shifts, and real worker ownership of businesses. Many people are tethered to jobs they despise and can’t leave because they need the privatized insurance accessed through their employer. After all, the one thing worse than a job you hate may be not having one, especially if you have a preexisting condition that puts your life at risk. Everyone knows that if you are not insured, a single accident can lead to a mountain of hospital bills. More than a third of Americans have medical debt.

When COVID-19 hit, people weren’t just afraid of contracting a deadly illness — they were also afraid of losing their jobs along with their insurance, and tens of millions did overnight. In the months before the outbreak, centrist Democrats and their allies worked hard to attack universal health care.

For example, in early February 2020, the leadership of the Culinary Union, which represents casino workers, came out against Medicare for All, arguing that it would cause their membership to lose their private insurance. (In the end, membership bucked their leaders and voted overwhelmingly for Senator Bernie Sanders, who supports Medicare for All.) One month later the casinos were shut down by the crisis. Even though these casinos got a hefty bailout, more than sixty thousand culinary workers were out of a job and without health care coverage. The pandemic put the pathologies of the American employer-driven, for-profit, debt-producing system of private insurance on display for all to see. In response to the global crisis, industry analysts predicted that health care premiums were set to rise by 40 percent, ensuring ever more people will pay for medical treatment with credit cards.

Debt, in this sense, is a kind of cover-up. Our private contracts, and our desperate attempts to be “good” debtors, all work to conceal a larger crime: the crime of treating health care, shelter, and education as profit centers. Think about the idealistic young student who wants to become a lawyer so they can fight for justice and protect those who have been harmed. By the time they get out of law school, they are looking at six figures of student debt. They could become a public defender — or they could enter corporate law. A corporate law salary allows them a path to pay off their loans. Suddenly the whole reason they wanted to study law in the first place has been replaced with its polar opposite. Eighty percent of Harvard Law School students, to use just one example, enter law school saying they want to practice public interest law.

Yet, upon graduation, 80 percent of them go on to practice corporate law. (“But there’s a Public Service Loan Forgiveness program to address just this problem!” you might say. To date, the government has denied more than 99 percent of those who have applied to get their loans discharged through this program.)

This isn’t just the brainwashing of the Ivy League — although there certainly is a fair amount of that, too — this is the disciplinary function of debt. Most of us want to be better people than we are allowed to be. We are forced to do things we are ethically opposed to, just to survive. We have to service our loans instead of serving the greater good.