Debt and Our Culture

Without a doubt, the financial crisis America is currently experiencing is inextricably intertwined with a cultural addiction to debt. Debt is not the only driver of America’s current woes, but it certainly is one culprit. Consumer debt has exploded in recent years, and many are quick to point the finger of blame. Liberal-leaning financial experts point to exploitative predatory lending practices as one of the main causes of consumer debt. Other, more conservative economists blame a lack of personal responsibility and a reliance on material consumption to fill emotional voids. Debtors may be grappling with obscenely high interest rates, but they still made a promise to their lenders to agree as paid, say some experts. In this post, however, we’ll explore a third theory—that America is now fettered to a culture of debt.

A New Theory

Out of the fray of the warring theoretical factions of social protection vs. personal responsibility, a new theory has emerged. The premise of this theory contends that people are motivated by a desire to earn the respect of their peers. No individual can go through life without being molded and shaped by the influences of those around him. We all internalize the behaviors and mores of the environment that surrounds us. Secondly, the decision-making process, whether it’s choosing a spouse or taking out a loan, isn’t exactly a completely rational and self-aware event. The decision-making process, in actuality, is a series of processes, most of which occur on a subconscious level. During these processes, the perceptions of the world that we’ve adopted from our fellows begin to operate. For the most part, we do what we see others around us doing, and only at the conclusion of the decision-making process do we really invoke any self-conscious awareness.

Application

Applying this theory to the dilemma of many consumers and even businesses today, what has happened is really just one chapter in a much broader social narrative. America used to value frugality and thrift—values that have slowly and quietly eroded over the last few decades. The cultural paradigm shifted, and now we are left with a culture of debt that condones and even embraces hyperconsumerism. People view spending and shopping as emotional analgesics instead of vices to be avoided. Analysts say the explanation for the culture of debt is trifold:

• Moral: institutions that once prized and taught values of thrift, such as schools and churches, no longer do.
• Economic: overly accessible mortgages allowed and encouraged consumers to buy more house than they could really afford.
• Cultural: middle-class people now expect to live upper-class lives, despite their lack of means.