American Capitalism Is Built For Debt

Some people think you can’t have capitalism when everyone is their own bank.

The more I think of our two-party duopoly, the more I see that they are completely unwilling to talk about the elephant in the room: piles and piles of personal debt.

It is a personal debt that shrinks our buying power. It is usury that takes our property, takes our livelihood, and buries us with debt. When our buying power shrinks so too does our economy. These days, no amount of tax cuts or government spending can overcome the current burden of personal debt to expand the personal economy we all live in. I think that’s a feature of the American economy, not a bug.

Republicans talk a good game about self-sufficiency and personal responsibility, but what they don’t talk about is how debt makes us dependent on someone else. They’re perfectly fine with 29% interest on credit cards as long as other people are paying that rate of interest. They’re fine with wage garnishments for student debt as long the student debt is not their debt. What they won’t talk about is how stagnant wages lead to personal debt while inflation marches on. They won’t talk about how all those service payments keep us one or two paychecks away from the unemployment line.

Democrats have a similar problem. They seem unwilling to admit or perhaps they are unaware, that if people save enough of their own money, they are not dependent on the government. These same democrats pay no attention to the policy choices that have been made to keep healthcare expensive while asking for free medical care. They tend to see people in dire financial straits as their base, not their problem.

From time to time, I wonder, would we even need a welfare state if the economy were truly fair? I bet that if average CEO compensation were only 10–15 times (instead of 350x) what the ordinary worker makes a year, there would be a lot more money left over to pay the workers their due. I bet if doctors had to compete with foreign doctors their pay would drop by half. In an equitable economy, everyone would be their own bank.

In my fantasies, I see myself saving up a year of expenses. I tally them up every year, figure out an average and check my trends, and set a goal to save a year of expenses. In an equitable economy, this could be a reality for everyone in America.

What would the economy look like if everyone had a year of expenses saved up just in case? For one, unemployment wouldn’t be a drag on the economy because people could still pay their rent or their mortgage and keep food on the table until something like the pandemic passed. With a year of expenses saved up, people could take a break from their jobs and wait for the right job. They could negotiate a higher wage. They could take a break due to illness, family death, or whatever. Maybe they could re-examine their lives and see if there is a better way to live life.

But many of us are just one or two paychecks away from being homeless. The economy seems built to keep most people desperate and worried about money. Most people are paying interest on a mortgage. Most people are paying rent. Millions of people have student loans to pay off. Millions more have credit card debts. Everywhere we look, we are enticed to get into debts that incur interest, like mortgages, auto loans, and credit card debt. It’s all out there.

Look further now at the things we can buy that serve only a temporary purpose like toys, gadgets, and knickknacks. Look at the subscriptions we can buy with Netflix, Amazon, and Spotify. Look again at the check stand at the supermarket and see all of the little things that are for sale, on display for the impulse buy. We are a high surplus society, but most of that surplus is spent on stuff that is not required for subsistence. Much of that surplus goes to the top 1% as compensation or shareholder value. A good chunk of that surplus becomes a service payment on a debt. Now consider all the people at the bottom who are living on subsistence.

What if we made it a national goal that everyone becomes their own bank? What if we made it a national goal for everyone to save one year of expenses? Imagine America as a country with a government program that includes education, support networks, and coaching that could teach everyone how to save up a year of expenses. I pause to wonder what that would do for our economy. That would put all of us on a very sound footing.

Instead of politicians telling us how big the next stimulus bill will be, they’d be focused on solving problems like crumbling infrastructure, healthcare costs, and ensuring that the ecosystem we live in will continue to support us. If most people have a year of savings, and the income to keep the savings, down goes the crime, down goes the medical debt, down goes the college debt. Heck, bankers might actually have to work for a living. I think that a country full of people with a year or more of savings will have time to engage in politics, and they could influence policy choices that matter to them. We might then see a more compassionate and enlightened society.

If you think this is pie in the sky, there is at least one man who has figured this out: Mr. Money Mustache. Here is a young man (younger than me) who figured out how to save up enough money to retire on his 30th birthday. He saved 60% of his income for ten years and then he had enough money to cover his expenses for the foreseeable future and do something that he really wanted to do instead of working for someone else.

Huh. Maybe that’s the real fear of the elites in America. If we save enough money, we might do what we really want to do for a living, making our own dreams come true, instead of working for someone else’s dream. I think that America is full of dreamers willing to work to make their dreams come true if they only knew how.

Write on.

Written by

Husband, father, worker, philosopher, and observer. Plumbing the depths of consciousness to find the spring of happiness. Write on.

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