To express my thoughts, here's a question I posed in a plenary session earlier today:
"A few folks have mentioned the need to demonstrate to the global markets that we can restore ourselves to a stable economy. But was a stable or sustainable economy what we even had in the first place? An economy no longer based on what we produce, but on ever-increasing consumer spending fueled by ever-increasing consumer debt of all kinds - which was making a huge amount of money for a small amount of people through usury charged to people who can afford it least (otherwise they wouldn't need the credit so much) in terms that no one can understand? An economy where we increasingly purchase essential or important goods and services (housing, transportation, education) through a system where we can't afford them initially and end up paying far more that their real value in financial service charges over the long term? We're talking about foreclosure, but shouldn't we be talking about the inevitable collapse of the economic house of cards we built on credit spending?"
We've created a class of people (and worse yet, of barely accountable corporate entities with the rights of a person) who are not only rich and powerful, but who can exercise even more control over us and our affairs because we are continually in their debt - and afraid of what they will do to us if we don't meet their terms. Never mind that the terms are unintelligible, that the contract is overwhelmingly in their favor and construed to keep us in their service; we'll never protest because the power of correcting or redressing wrongs is almost entirely on their side. And we've convinced ourselves (that is, allowed ourselves to be convinced by them) that we need what they offer us in order to live lives of any value.
Enough! How long are we going to sell - or buy - ourselves into slavery? Really, this isn't just an issue of credit systems, but of the entire system of production and consumption. When we decided to stop making what we use, or knowing who made it or where it came from or what's in it; when we decided it was easier and cheaper to let someone else manage and truly know our trade, our laws, our "self"-rule, and we stopped caring whether or not we understood what they did; when we chose quantity of everything over quality of anything. I am beginning to abhor the system I live in, and my own role in it.
I want the sustainable life: based on as direct a relationship and understanding of the world and people around me as I can possibly manage. I'm not sure anymore why all these activities and all the busyness of my life right is so important, when it is mostly concerned with keeping up such inequity and degradation. Tell me what is more important that making sure I know those who live with and around me; that I know who grows my food or makes my clothes and tools, and how; that I provide or produce the things that I and others need; that I raise my family and care for my neighbors; that I help us work out our differences and have just and loving dealings with one another? What is my life focused on if not these things? And don't say serving the Lord wherever I am; these very things are the essence of serving the Lord in practice. And I live a life right now that distracts (if not keeping me outright) from all of them.
This was going to be a post about why I wasn't going to participate in the credit system anymore besides paying off my existing obligations; but it suddenly became something else. I feel this call again to change my life so radically, much as I felt it last year. But I still want to do this in community - I think I'd have to to make it work - but I don't know where to find those other people. I sadly think I might have to go from Boston to do it; how far am I willing to go (literally and figuratively) to live this life to which I think I may be called?
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I'm awfully glad I was able to take out loans to go to grad school. I'm also glad that I graduated with about half the debt of many many many of my colleagues (that's partially due to me being lucky, partially due to me being smart). But if I had had to come up with cash up front in order to go to school I never would have been able to do it.
Also, I'm glad I was able to take out a (fixed-rate, with hefty down payment) mortgage to buy a home this past year. I now pay less in housing costs each month than I did while renting and that gap is going to increase as the years go by and inflation does its thing. I'd rather not struggle for decades to save up enough money to buy a home outright while also paying rent.
Does the availability of student loans and home mortgages make it easier for the cost of those goods to rise? Sure. But they also make those very good things accessible to a much broader portion of the population.
And, gosh darn it, I'm glad that when I got an egg-and-cheese sandwich and vanilla latte this morning I could put it on a Mastercard which I'll pay off.
Can the credit system be abused? Sure. And it often is. And while the banks, etc., certainly bear some responsibility here I don't think I'm as willing to absolve the consumers as you are. But I cannot imagine that you really want to live in a world without a credit system. You're more intense than just about anybody I know, but really.
Actually, I do want to live in a world without a credit system, and I understand that will make most people in the modern world think I'm daft. But I think we make this assumption that the credit system was a good innovation, without really asking ourselves why.
It's not so long ago that buying anything (let alone so many things) on credit would have been considered unusual; my dad, who is not yet 60, distinctly remembers preaching in church that exhorted members to save and not use credit. It used to be the norm to save up diligently and for a long time to build or buy a house or to purchase a car; honestly, why should we expect to do otherwise for expensive items that we can't currently afford? The backwards part is the culture of immediate gratification that says we should have those things right away, and the rampant inflation of prices such that almost no one can ever afford those things without credit, and most of us can barely afford them with credit.
Consumers are by no means blameless in this affair; the whole system is fueled by our greed and impatience. If we're going to be like that, then we're just as responsible as those who take advantage of our greed. Now, I say just as responsible, meaning I think the costs should be borne by both parties; that's where my inequity rant comes from.
I'm not daft. I know that eschewing credit basically eliminates the possibility of grad school for me without finding a patron, or of buying a house in any market. I know I'd be giving up a significant amount of convenience, privilege, and probably public respect as well. I'm more intense than anyone I know, either, and sometimes I feel like I'm going off the deep end. But my growing awareness of the world around me keeps moving me toward this radicalism, despite how nonsensical it will seem to everyone else around me. I guess I just have to live with that until I figure out what to do with myself.
Yeah, those churches who say that any sort of borrowing is bad are still around. They're probably less numerous than they were a few decades ago.
I don't see why it would be more righteous for me to struggle for my entire life to save up for a home while also paying rent. If that were the only way to do it, very few people would ever be able to buy property -- and when real estate is the biggest generator of wealth for most families that has huge social justice implications. Talk to Faith sometime about the generational effects of housing policies that made it more difficult for African American families to buy homes. Those who were not able to take out mortgages were not better off.
Think about It's a Wonderful Life. All these families were able to move into decent housing which they owned themselves rather than renting forever because George Bailey stuck with the Savings and Loan. A romanticized picture, certainly. But there's truth there too.
Look at microfinance. Grameen and its ilk have done a tremendous amount of good for the world's poor -- by lending money at interest.
Look at Scripture. The servant who buried his money in a hole in the ground rather than at the very least collecting interest is not exactly praised. If someone is collecting interest, some borrower has to be paying it. (Yes yes the point of the parable is hardly financial. But it's a mighty strange example to use if borrowing and lending is always bad.)
I definitely think it's a stretch to argue that the parable (if you're referring to Matt 25:14-30 or Luke 19:11-27) offers any approval of lending at interest. In a broader Scriptural context, lending to a countryman at interest is specifically prohibited in the Old Testament, as is lending at excessive interest to anyone; Jesus' own reaction to moneylenders in the temple seems to indicate that the New Covenant doesn't view usury favorably either.
Credit in its simplest form - which doesn't involve charging any interest at all - isn't a bad thing at all, and is a practice that has been used for millennia in civilizations all over the world when a relationship of trust is extended to those who have temporary need. I wouldn't even be nearly as opposed if we were looking at cases where only a small amount of interest was charged to cover some of the risk of lending. But when you're looking at a 6% mortgage on a $250,000 house (let's not even get into the affordbility question) that ends up costing you twice that amount by the time you've finished paying your interest, I think that goes well beyond just covering a little risk. And that's not even talking about other kinds of credit/loan structures, where interest is much higher.
So we've eliminated most of the things that make credit acceptable: a personal trust relationship with your creditor; credit being temporary (20 to 30 years counts as pretty long term, and even other kinds of credit are usually meant to go on for years); and no or not excessive interest. Not only that, but we've built a financial system where credit isn't an exception in times of need, but where need requiring credit is the norm. We've built a system where choosing not to engage in credit spending is considered nonsensical! Maybe using credit isn't always unrighteous, but certainly not using it shouldn't make you a market outcast. Backwards.
And finally, I'm not sure that trying to ensure wealth creation (versus ensuring sustainable meeting of basic needs) ought to be any high priority of our society or economic system. It just feeds into the notion that power should be based on wealth, and drives people to focus on that wealth creation because they think it's the only way they'll have any control over their lives, let alone access society's benefits. At least a portion of this crisis is also caused by the culture of property worship we've created, where a valid American dream has to include home ownership, whether or not that's an appropriate or desirable lifestyle for you.
I'd say it's not a question of how far you'd have to go for a sustainable, credit-free life; it's more a question of how close to home you could stay.
When I lived between the suburbs and the sticks in NJ (yes, those places do exist there!), we had an organic farm up the road, minimal mileage, the ability to stay on or below budget, and a decently low carbon footprint. Our only real use of credit was our fixed-rate mortgage (and before diving into that one, we made spreadsheets).
But life can be unpredictable; I now live in Singapore and travel often, and as a result I can't control the timing and level of expenses (or carbon footprint) as tightly. To stay in touch with family, I have to fly halfway around the world and spend huge amounts of money on calling cards. The produce, organic or not, is often flown in from far away. I use lots of electricity (and funds) just air-conditioning my home--and yet, as I live at the equator, it's a necessity. We're expats, so the company often has more say in our major spending decisions than we do, with the result that some of our bills and expenses are in one country, and some are in the other. And like it or not, especially with the falling dollar, everything is expensive here.
So we use credit much more than we did before. Our alternatives are carrying huge amounts of cash (that might get lost or stolen) or frequently wiring money across the world among our different accounts in different currencies (for costly fees, plus you never know how long the money will take to show up). It's much better to get everything on one monthly statement, in one currency. (It also allows us to buy things online, which is nearly impossible in a cash-based society, as we've seen in Singapore.)
Do we pay off the balances every month? Sure. But we depend on the system of credit to make it possible for us to live with one foot in North America and the other in Southeast Asia. Don't get me wrong; a life without credit is nice, and maybe preferable, if you're staying in one place, if you're not making major changes in your life, and if you're reasonably close to family and friends. But that doesn't mean that credit itself is always a bad idea, if you're smart about how you use it and careful to read the fine print.
I find this conversation so interesting, because people's responses let me explore some of the assumptions we make about the necessity of credit. It's very thought-provoking.
One of the things that struck me in your response, Jenn, was the question of how to live sustainably in Singapore. It seems that what is true here in the US is as much true over there, and probably throughout the modern world - we've totally lost touch with how to live appropriately in the places where we reside. People were eating and living in Singapore before air conditioning and transoceanic shipping; what did they eat, and how did they keep their homes tolerably cool there at the equator? As modern people, do we even know how to build climate-appropriate housing or workspaces in a place like that? Is there anyone alive who remembers and could help us figure it out again? Does anyone know what it would mean to eat a diet entirely grown and/or raised in Singapore, progressing along with its seasons? Do we not do this because we can't, or because it's too inconvenient and requires too much change of our habits and expectations to do things sustainably?
I also wonder about the use of credit versus other financial tools that would get more at the root of the challenges you mention. If we need faster money transfer systems, why not just create fast and reliable money transfer systems? (After all, that's kind of what credit is, except that you pay it out of someone else's money and then pay the someone else back with interest with your money ... why not just pay the party receiving the transfer with your own money, and get rid of the middleman?) Why not make a debit card - which is directly linked to your account and your funds in hand - as easy to use and as universally accepted as a credit card? Especially if we are all handling our credit responsibly and paying off the balance every month, why not just eliminate the middleman again and pay our expenses directly out of our funds in hand?
I think the ability to electronically transfer money is an excellent thing, and allows us much greater flexibility to use and access our funds in a variety of places. But electronic information about and transfer of our funds is not the same as the credit market - and there are some specific barriers put up in the system that actually make it harder to use your own direct funds when you have them than it is to pay someone else to use their funds. Why is the system like that, and who does it benefit? Not me or you, I think.
Huh. Before air-conditioning and ocean shipping, Singapore was a bog. To put it gently. ;) I think people ate nothing but crabs, and perhaps mangoes, and died young on account of heatstroke. Some places are more conducive to sustaining life than others. That said, it makes sense to try to live off the place you live in, doesn't it?
You have a good point about the creditor being the superfluous middleman. That's it exactly; it takes a creditor to convince some bank in Singapore that really, I do have some money!--it's just somewhere else, far away, in some other bank. Apparently the world is not quite small enough, yet.
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