A few years ago, when times were “good,” my BFF went off and got an MBA. She was promptly hired by one of the national accounting firms and abandoned friends and family to sacrifice herself at the altar of workaholic globalism in the hopes of grabbing a multi-million dollar brass ring. Being human, I succumbed to a bit of envy, and sought out the website of her company which had an online examination that would let you know if you “had what it takes” to be one of the firm’s exalted serfs.
I flunked. One of the questions asked how I might approach setting up a credit card franchise in a developing country. My options included asking clients for a simple annual payment versus charging them a list of fees, many of them usurious, for a variety of card functions. Sensitive to the fact that the per capita income for the country was in the pennies, I chose the lowest cost option for the potential client. BZZZ. No, to be a viable candidate for this firm, I needed to have picked the option that maximized the company’s profits ... and tempted inexperienced users with opportunities to become entrapped in debt.
Well, fortunately, I earn my paycheck in a field that honors altruism. But the online exam highlighted very clearly what the “game plan” was for credit services as far back as the ‘90s. And we are reaping the results today. Unfortunately, those who were in charge of the “reaping” are now “heaping” the blame on the unfortunate American consumers, criticizing them for materialistic greed that led them to be mired in credit card debt.
The offensive defense goes like this:
· Middle class and working class consumers wanted to keep up with the Joneses and spent money they didn’t have.
· They charged more and more things they couldn’t afford on their credit cards.
· They used home equity loans from the housing bubble to subsidize the cards.
· The housing bubble popped, and whoops, now the piper has to be paid and can’t be. Bankruptcy looms.
Now, shall we take a stab at reality?
· Wages were frozen while hidden inflation ran rampant. Food, gas, housing, health care—through the roof. Middle and working class families lost ground.
· Mad Men used finely honed techniques to entice consumers into patriotic shopping to keep the economy’s engine running and maintain the corporatist myths of trickle-down capitalism. Because credit was so “freely” available (though with hidden costs, anything but free), vendors could charge much higher prices than a non-credit market would support, expanding their profits from consumers’ purchases.
· Credit card companies were allowed to play loan shark and charge usurious rates up to 39%, binding many card users to a lifetime of debt. Meanwhile, financial institutions benefited from interest rates as low as 1-2% for their own transactions.
· Low interest rates helped bankers, but artificially inflated house prices during the “bubble”. The Ponzi winners got in and out “flipped” us off with their quick profits, but the majority of homebuyers were left struggling to afford payments on an overpriced home.
· To keep afloat, middle and working class Americans used sources such as credit cards for help with housing, food, medical bills, transportation, etc,…. Meanwhile, gas companies and oil barons posted record profits in the billions. High health insurance premiums and claim denials subsidized the greed of the executive class.
· When the “house of credit cards” collapsed, bailouts were given to the wealthy, while Main Street was chastised for their gluttonous spending habits.
No, we consumers of the middle and working classes must not accept the blame for being pawns manipulated in these high stakes games. Sure, we may have indulged some materialist desires, but, are we in the working and middle class truly less deserving of some perks than the jet-setting, yacht-sailing, mansion-decorating elite that is luxuriating in our perspiration? My answer is no. And, for the majority of “debtors” who have been drawn into serfdom to simply survive, the answer is “Hell, no!”