*Originally appeared in the Feb. 19 edition of the Laurel Chronicle newspaper
For the people who think I’m one of those conservatives who hate the New York Times, this column is for you. The fact is, I usually dismiss the Times as a bunch of writers living in la-la-land, but I don’t really hate the paper. Until yesterday, that is, when I read a piece titled “How Credit-Card Debt Can Help the Poor.”
You read that right. The intellectuals at the New York Times have boldly declared that increasing the debt burden of the poor can help them. After all, the notion that “hard work and thrift are all Americans need to get ahead” is an “out of touch” ideal. More than 70 percent of us have a credit card, according to the Times, which obviously means that’s the way the world should work. Everyone’s doing it, so why shouldn’t the poor do it, too?
The Times tries to normalize the idea that carrying more debt is a good thing. Of the long-held idea that “debt is bad and savings is good,” the Times urges readers to relinquish themselves of that antiquated notion by relying on a more progressive economic worldview.
Poor people need to rack up credit card debt because it helps them build credit. “Life without credit is not only expensive; it’s also potentially ruinous” because, you know, a person can’t get one of the “most desirable” apartments because landlords run credit checks. Yes, the New York Times said poor people should go deeper in the red because it might help them get a “desirable” apartment.
I’m going out on a limb here, but I doubt credit worthiness is the sole barrier keeping a poor person from leasing a desirable apartment. For example, in New York City, the home of this esteemed American paper, the average rent for an apartment is north of $3,000 per month, according to REIS (a real estate marketing firm). In a city where close to half – 46 percent – of people are considered poor, these prices are outrageously expensive and cost-prohibitive.
Having good credit won’t magically enable a poor person in the Big Apple to swallow a $3,000 per month apartment lease. Heck, I’m not sure many of us could afford that type of city living. (Some perspective: The average NYC apartment lease is more than three times the amount of my mortgage.)
The Times admits that, perhaps, the idea of encouraging low-income people to borrow money, “and then to get a credit card enabling them to borrow more, may seem counterintuitive or even a little risky.” Well then. At least they understand my frustration.
In an interesting paragraph – interesting in that it advocates one thing, then proclaims the opposite to be true – the Times urges Americans to “save more.” In 2013, Americans saved about 4.5 percent of household income, or half the historic rate. The solution to saving more money is spending less, right?
It’s not really that black and white, you see. Teaching poor people to save may be “understandable” (the Times couldn’t even fully support that fiscal concept), but a better goal is to enable low-income people to enter the “economic mainstream.” (That’s the sort of phrase intellectuals love – it’s academic; it’s ambiguous; it can mean whatever it needs to mean.)
It’s gets really juicy when the Times quotes a well-intended, dramatically misguided advocate, Ricki Granetz Lowitz, who says they’re “fighting against the sentiment you should cut up all your credit cards.”
Speaking of academia, the Times breaks new ground by offering the following insight: “From a behavioral-economics perspective, borrowing can actually be easier than saving.”
Seriously you guys. They actually publish this stuff.
Now before I get too high and mighty (perhaps it’s too late for that), I will note the Times piece said borrowing is easier for many reasons, and not just because it offers instant gratification. Owing someone else money is a big motivator to actually pay it back, they claim – so much so that you’re more likely to pay debts than you are to save money for the future.
…and this helps you, how?
As if I needed any further provocation, the piece continues: “‘The impulse to stay away from helping people get access to credit it based on good intentions, but it’s not based on an understanding of how people live their lives responsibly’…Indeed, the fear that offering credit to the poor will lead to an inevitable disaster may be overblown.”
Yes, America, because the one thing we’ve learned from the Great Recession – the worst economic downturn since the Great Depression – is that going deeper into debt generates financial prosperity. Lots and lots of it. (Perhaps that’s the definition of “economic mainstream.” Going into debt is sort of vogue, I guess – just look at our federal government.)
The piece ends on a real bang, saying credit card debt builds credit and, in turn, allows poor people to spend their own money. “That, too, is how America gets ahead,” they proclaim.
Except it’s not their money. It’s borrowed money that will enslave them in an endless cycle of principal and interest payments until the next borrowed payment.
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