Are you debt-free?
According to George Bush, Americans corner the market on freedom. He used the F-word 27 times in his second inaugural speech, and it’s the first word on his lips as a prescription for Iraq, Afghanistan, Iran, the Middle East … the world.Americans love the doctrine of freedom, even when freedom of speech is jeopardized by domestic spying, when freedom of mobility is hampered by $3 for a gallon of gas, and when freedom of choice is in the hands of a conservative Supreme Court. When the president tells you that Americans are free, we begin to believe it … until the bounds of our personal freedom are constricted by personal debt. How much debt can we have and still be free? Economists reported last week that America is caught in a “negative savings rate,” meaning that consumer spending has far outpaced income growth, pushing the savings rate to the lowest level since 1933 – the pit of the Great Depression. The report states that in 2005 Americans spent all their disposable income, then dipped into their savings to finance their purchases. They did so primarily by borrowing against rising home equity. A negative savings rate is the ultimate expression of a debtor economy, where living within your means has become a quaint colloquialism. You want a new SUV? Take out a car loan. A new flat-screen TV? Put it on your credit card. A 4,000-square-foot house? Get a mortgage. We bind ourselves with debt, then kick back in luxury, surrounded by the tokens of wealth. The façade disintegrates when the rest of our working lives are spent paying it off, if we can ever pay it off. Lifelong debt smacks of Feudalism and serfdom, when all land was held by a titled class and everybody else paid homage through labor, military service and the surrendering of one’s earnings.Today, in order to enjoy the fruits of industrial society, many Americans have entered into a kind of neo-Feudalism. We leverage our homes to the hilt and essentially surrender ownership to a creditor. The only thing that separates debtors from serfdom is vocabulary. We’re not serfs; we’re free Americans who freely decide to go into debt. We pay homage to the credit system by slaving at our jobs. Our working lives are bound by consumer decisions, and the economy thrives on our indebtedness.”Although peons are only obliged to a creditor monetarily, from a practical perspective, the resultant relationship of a peon to the creditor is destructive of basic personal autonomy within the society.” According to this definition, America has created a huge class of peons who spend away their autonomy, which is another word for freedom. Today’s negative savings rate is based on a booming housing market that makes homeowners feel wealthy and eager to spend. The present cooling of the housing boom, however, could temper what economists call the “wealth effect.”Spending one’s savings didn’t work in 1933. To think it can work today is ludicrous, unless you believe the housing market is invulnerable and that crushing debt is somehow beneficial to your freedom.”Debt bondage is often a form of disguised slavery in which the subject is not legally owned, but is instead bound by a debt, under terms that make it impossible to completely retire the debt and thereby escape from the contract.”Debt bondage means owing your soul to the company store. The deeper we go into debt, the more we enslave ourselves to industrial producers and retail magnates. The president sings the song of freedom, but how free are we? As free as our economic bonds allow.Paul Andersen thinks freedom’s just another word for nothing left to lose … because we’ve already spent it all. His column appears on Mondays.
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