Humanities concepts and applications

¶ … college campus across the country, students are greeted with the familiar sight of individuals seated at folding tables, with the purpose of marketing credit cards to them. These salespeople are most frequently seen during the beginning of the college semester and are usually young and attractive and smiling, barely older than the students themselves. Quite often, if a student fills out an application for the credit card, he or she may receive a small toy or a gigantic in exchange for his or her pains. What could be more harmless? What's wrong with having a credit card on hand, 'just in case?'

However, this familiar sight is one of the many reasons that college students are becoming more and more deeply ensnared in debt. These smiling individuals prey upon students when they are at their most vulnerable. Most of these students have just had to pay hundreds of dollars for a semester's worth of books. Perhaps they are still looking for a part time job to help out with their tuition bill. These students are the perfect candidates to trust an young individual whom does not seem so different from themselves, who promises them a favorable monthly rate in exchange for their signature. Even the added 'free gift' makes signing for a credit card one is ill-equipped to pay more like something fun, like getting a birthday party goody bag as one did when one was a child, rather than engaging a serious economic decision that could impact one's future life. In fact, one could say, one is signing away one's economic life into a form of indentured servitude or slavery.

Dramatic as this statement may seem, the very concept of credit has strong parallels with both indentured servitude and sharecropping, the economic institutions that preceded and then followed the formal institutionalization of slavery, first in Colonial, then in Reconstruction-era America. In colonial America, indentured servants would be freed of their obligations to their owners after serving for a period of years.

17th century contract for indentured servitude in Virginia stipulates that in return for passage to the New World, the individual would give up seven years of his freedom in the form of unpaid labor to his master. In exchange, after the seven years, his obligation would be settled. The master could also, if he wished, give as the man's 'freedom dues' some land, money, tobacco, and perhaps some tools. (Indentured Servitude Contract in 17th Century Virginia. Stratford Hall History Resource of Historical Documents)

Like a credit card application of today, the man entering a period of indentured servitude was given something -- passage to America -- in exchange for an agreed-upon obligation. He could have no full knowledge of the exact extent of the obligation he would be undertaking over the course of the next seven years. The most popular and the most obvious argument that credit is not a form of slavery is that individuals chose to sign their names willingly to receive credit cards. But merely because someone chooses to do something does not automatically mean the transaction is a fair one. The choice an individual makes must be one of informed consent. In indentured servitude, no informed choice could be made, because the extent of the duties the man owed to his master were not detailed in full. (Indentured Servitude Contract)

Why would an individual embark on such a contract and sell his body and soul into uncertain circumstances for a period of seven years? The answer, quite simply is poverty. Individuals were facing such desperate circumstances at home that they were willing to subject themselves to unspeakably tyrannical masters, in the hopes of making something better of their lives. This is the same logic that individuals use when using credit. "I'm spending money to make money," the unsuspecting student tells him or herself. "Perhaps if I buy that nice new suit on credit, I'll look nice enough to get that part-time job." Or, "I'm buying my textbooks on credit now, but someday I'll be making enough to afford to buy everything in cash and pay everything up at the end of the month -- as soon as I get a great job with my college education." The unsuspecting individual thinks only of the immediate present and the far future, rather than their immediate economic circumstances. The Internet site Student Credit.com actually has a website targeted at high school students. "Credit it a big responsibility," it counsels. However, such counsel seems to fly in the face of the fact that it is specifically encouraging minors to obtain credit cards they are, by virtue of their status and age, unlikely to be able to pay. (Student Credit.com) One is irresistibly reminded of beer commercials with cartoon characters that counsel drinkers to drink responsibly and only if they are over the legal drinking age of twenty-one.

This assumption that wealth is generated by spending money is not entirely absent of factual content, of course. After all, according to no less than the nation's premier academic business journal, the Harvard Business Review, one article entitled "Wealth Happens" states that "wealth accumulates either by transfers from person to person or through investment returns, positive or negative...rich people invest more money than poor people." Because they invest more money, rich people make more money. (Buchanan, "The Big Picture" April 2002)

However, the sort of spending encouraged by credit cards is usually not in appreciable investments. Rather, credit cards encourage spending upon non-appreciable assets such as impulse buys, or large-ticket items such as cars or electronic purchases, which depreciate by a considerable amount every year, through wear and tear and also through developments in new technology. Such developments make the less technologically developed products of the past year less valuable. Unlike education, which can be financed through scholarships and student loans, buying with credit cards does little to make one more economically solvent, no matter what credit cards tell you.

White farmers also took advantage of this sort of thinking, that buying on credit would increase one's economic potential, after African-Americans were freed during Reconstruction. After the end of formal slavery, many African-Americans subjected them to a slave-like institution known as sharecropping. In exchange for working a patch of rented land and tools, extended to them on "credit," sharecroppers gave their landowner a percentage of their share of crops. Quite often, this share was so exurbanite the former slaves could not make up their quota, and were thus tied to the land to make up their share. Why would former slaves do this? It was not because they trusted the whites whom had formerly enslaved them. Rather, former slaves believed that land was the key to survival. They saw land ownership as a symbol of their freedom. But "High interest charges, emphasis on production of a single cash crop, slipshod accounting, and chronic cropper irresponsibility were among the abuses of the system," that caused African-Americans to be permanently tied to the land, desperately trying to make up many past years of owed interest. (Sharecropping Encarta Encyclopedia) The former slaves believed that so long as they had land, they could create new lives for themselves. A bit of indentured servitude, they thought, they could ultimately use to their benefit. But it was in the interest of landowners to keep them tied to white's land and to preserve their ties to the sharecropping system, not to own land. Thus, although "we sometimes imagine that such oppressive laws were put quickly into full force by greedy landowners. But that's not the way [this form] slavery was established... It happened gradually -- one person at a time, one law at a time..." (PBS Online Africans in America)

One reason credit card debt seems to pile up so subtly, month after month, is that he popular media encourages economic indulgence and spending on credit. In the article "Debt, Me Worry?" The popular woman's magazine Elle, aimed at women in their twenties and early thirties, included an article by a woman who proudly stated. "I pull out my credit card anyway. I've been spending a frightening amount of money recently, considering that I was laid off last spring." Rather than fearing this, she states, "Credit is empowering.... Allowing yourself to live beyond your means can be profoundly rebellious and liberating." (Martin 134) This is, even though the author reveals at the end of her article that she is pregnant and going to have a baby. (Martin 246) The author makes her spending on credit seem like an emotional tool of empowerment, but really all it is doing is keeping her more and more tied forces beyond her control that are taking away her independence and making her more and more economically beholden to the credit card company. Rather than saving or investing her money, her money is spend on depreciating consumer goods. The author admits in her article that she "laughs" when financial guru Susie Ormond tells her that she is spending because she has "low self-esteem." Ormond traces Martin's spending to "shame" that she "lost a job," and suggests that Martin will not even use her purchases because "every time" Martin will look at those purchases, she will be "reminded of the fear" she felt when she bought it. (Martin 246) But what Ormond says is true -- many compulsive shoppers do not even touch the purchases they make or take them out of their wrapping.

Beyond even this, however, Ormond touches upon an important point. The same emotional forces that drive people to buy on credit -- shame, desperation with their present economic circumstances, depression, and false hope in the impulse of the moment, are all of the same forces that drove people into the circumstances of indentured servitude. Joking references are made to 'retail therapy' in the popular media. Such therapy usually involves only healing the holes in the wallets of the credit card company and retailers, rather than ordinary consumers who are spending beyond their means to medicate themselves from depression or other woes.

The example cited above also highlights another vulnerable population victimized by a reliance upon credit cards besides students -- women. Women are far more likely to spend in excess of their means than their male counterparts on depreciable consumer goods, and the popular media only serves to encourage this. Women are also, on average, far more likely to suffer from depression than men. Besides students and the poor, credit card companies are thus also quite skillful at targeting this other quite vulnerable population. In her memoir of drug addiction and depression, entitled, Now, More, and Again, Elizabeth Wurtzel states: "in an age when sophomores in college have eight-thousand-dollar spending limits on their gold and platinum plastic. I defaulted on my student loans, I neglected to pay my taxes for a year or two...If Argentina were a person, she'd be me." (Wurtzel 60-61)

However, it is important to note that the popular media is not entirely irresponsible in regards to its reporting on credit card debt. To offer a parallel example to the article cited above from Elle, "Wallet Watch" in Glamour magazine states that "zero interest may not be in your interest." Beth Kobliner points out that although stores offer zero percent financing on many large purchases and store credit cards, nine-two percent of consumers still end up paying interest. If an individual can't pay off the store on time, the interest rate "kicks in" at an exorbitantly high rate, often as high as twenty-seven percent, hardly a bargain. (Kobliner 166) To go back to the idea of investment, once again this is an example of buying on credit not being an investment, but merely an impulse purchase of a non-appreciable asset that costs more than one bargained for at the outset.

To again return to the example of indentured servitude, this is again reminiscent of some of the contracts used by individuals who were suffering under that institution. The individual was promised passage in exchange for the performance of certain duties. However, in many contracts, if the individual was unable to meet his duties, the length of his period of servitude was lengthened. Depending upon the cruelty of the master and the master's willingness to take advantage of that individual's personal circumstances, that individual was often forced into longer periods of servitude because he was unable to meet the stringent requirements for that master's determination of what the rather vaguely defined duties were. (Indentured Servitude Contract in 17th Century Virginia. Stratford Hall History Resource of Historical Documents)