A REFLECTION
This morning, I read an article in Above the Law, a magazine that targets issues relevant to freelance lawyers. In it, editor Elie Mystal lamented the $150,000 debt he assumed to finance his legal education. He called law school debt "The Silent Killer." His experience with debt even caused him to characterize his legal education as an "expensive vacation that debt financed."
In many ways, I am in Elie Mystal's boat. I graduated from law school in 2006 with about $95,000 in debt. Like Elie, I detested private practice and gave it up on principle. You see, I have this little problem: I insist on ethics and honor. That makes private law practice, well, a bit incongruous.
Since 2007, I have done consulting jobs that pay the crushing loan installments. Even more recently, I haven't been able to work at all due my partner's health crisis. The creditors don't care, of course. They just want their monthly checks; they don't give a damn about your problems.
I agree that debt is a "silent killer." Thanks to bank-friendly Bush-era deregulation in place at the time I signed my promissory notes, my loan principal has actually increased since I began repaying in late 2006. In essence, the banks have a permanent lien on my financial lifeblood, which is meager at best. This permanent financial burden robs voluntariness from all my employment decisions: I can't work a public interest job that won't even cover my monthly debt bill. I call this predicament "modern indentured servitude" because debt essentially compels work particular jobs in order to pay off the boulder that has been tied around their necks. Their choices are illusory; they must take a job that pays a certain amount or go bankrupt.
Elie also should have mentioned another issue that contributes to the debt crisis plaguing American graduate students: Deception. To be blunt, I entered law school under almost laughably false economic assumptions. I believed that my legal education would entitle me to an automatic $125,000-a-year job. I had worked at a law firm before law school and everyone there said that a law degree is basically a meal ticket. Law schools perpetuated that belief with "employment statistics" that corroborated my assumptions. Thus, I happily took out $100,000 in loans to finance my meal ticket. After all, I thought, what's $100,000 in debt if I'm certain to have a $125,000-a-year job waiting for me when I'm done?
"Ha! I can pay that off with a single bonus check," I declared in 2003.
What foolishness. But it is widespread foolishness. And every new law student subscribes to it. I know I did. Plus I was a wet-faced 25-year-old who knew nothing about the brutal vagaries of the private employment market. No, I learned the hard way--and only after sinking myself into an intractable debt pit.
Despite all this, I disagree with Elie's assertion that law school was a "very expensive vacation that debt financed." I do not regret my education in the least. I took it seriously; I never felt that I was on vacation while studying. True, it is unfortunate that I had to become an indentured servant in order to obtain my education. But I relish what I learned in law school. As a writer, it helps me every day. It enriched the way I think about every intellectual issue I encounter. I am thankful for my legal education. It pays psychic rewards in the classical sense, even if it does not fill my bank account.
But most people do not get educations--at least in America--to enrich their perspectives. They get educations to get jobs and make tons of money until they die or retire. In my view, this is the fundamental problem with the American system: People do not care about learning for its own sake. They use it merely to become commercial instruments for the rest of their lives. In that light, it is no surprise that debt plays a role in the system. Just as entrepreneurs take out loans in order to make more money in the future, so too do students take out loans in order to transform themselves into "profitable ventures." American students, in other words, are no different than entrepreneurs; they both gamble with debt in order to cash in later. And the goal of education in America is exactly the same as the goal of everyday business: Simple commercial success.
This leads me to my core objection: Shouldn't academic pursuits and crass commercial concerns be distinct? Sadly, the educational debt quandary in America shows that they are not.
That's a shame. And it's ruining many people's lives every day.
If only we could follow Aristotle's prescription for education: "[F]or it is more necessary to equalize appetites than possessions, and that can only be done by adequate education under the laws." The Politics, Book II, ch. vii at 1266b24.
In other words, education should not be a means to obtain "possessions," but rather to refine "appetites." It is not about "having" tangible things. It is about character; and you can't buy that.
Showing posts with label Loans. Show all posts
Showing posts with label Loans. Show all posts
Thursday, January 7, 2010
Monday, August 24, 2009
THE HAPPY PAWNBROKER : "WHY I LOVE SECURITY INTERESTS"
By : Mr. George F. Schwender, B.S. (1984), Kankakee Community College (Financial Administration magna cum laude); High School Diploma (1980), Sheboygan Crossing High School (Prize for Excellence in Arithmetic); Owner, The Milwaukee, La Crosse & Rockford Loan Company, Inc.; Member, The American Pawnbrokers’ Union (1988-2004); Editor, I Like Loans Magazine (1990-present); Unmarried; Millionaire.
I have a good life. I am a pawnbroker and I am happy. People say that pawnbrokers are nasty parasites who prey on others’ misfortunes. They say that pawnbrokers profit from others’ misery and hard times. They say that pawnbrokers cannot love or experience happiness because they mercilessly track down debtors and sell off prized family heirlooms without a shred of concern. They say that pawnbrokers have no compassion and would sooner die than lose money.
Yet I defy the stereotypes. I am happy. I can love. I have compassion. Specifically, I love security interests.
Security interests made my fortune. Do you know what a security interest is? According to the Uniform Commercial Code, it’s an “interest in personal property or fixtures which secures payment or performance of an obligation.” U.C.C. Article I § 1-201(37). That might sound like legal mumbo jumbo, but it’s actually quite simple. Basically, it means I give you a loan. In exchange, you give me an interest in your personal property. “Personal property” means anything you can move, so I can’t give you a loan on your house. Banks do that. You don’t need to own a house to get a loan from me. Rather, you can come on down to the Milwaukee, Rockford & La Crosse Loan Company and get a loan on stereo equipment, candlesticks, family portraits, video game consoles, hickory chests, jungle gym sets, record players, old chairs, used televisions, table cloths, bottles, watches, clocks and anything else in your house, except maybe the kitchen sink or the furnace. I give you the money and you promise to pay me back. You also promise to pay me interest every month. And if you don’t pay up, I take your pledge because I own it by law. That’s what a security interest means. You can look it up in the Uniform Commercial Code, Article 9.
I run a brisk business. People always need money in a pinch. And people always have something somewhat valuable lying around the house, so they bring it down to my shop. I look it over. I do some calculations. I ask him how much he wants on it. If he only wants $100 after pledging me a $14,000 silverware set, I know he probably stole it. But if he wants $4,000 for the same silverware set, I know he probably owns it; and I make it out whether he pays me back or not. After all, I get a security interest in the $14,000 set. If he doesn’t pay me back the $4,000 I loaned him—plus 15% interest per month over 12 months—I get to take the set and sell it for $14,000. So it’s a great deal for me. True, sometimes people get emotional when they pawn family heirlooms like silverware sets. But who cares about them? I’m just trying to run a loan company. And I’ll tell you, in tough economic times like these, I couldn’t be in a better business. I’m not just recession-proof; I’m recession-powered.
I hear the craziest stories these days. People come in saying they lost their jobs and they can’t pay a medical bill. They tell me they just got divorced and can’t make a child support payment. Other people say the car company is going to repossess their car unless they pay the note. So naturally all this puts me in an excellent bargaining position. I don’t have to risk much money if the borrower is desperate. What do I care if the borrower doesn’t pay his child support with the money I loan him? That’s between him and the woman, not me and him. If he doesn’t pay me back the $175 I lent him on time, I get to keep his $1,500 golf club. Yes, people scream at me and call me an avaricious old leech. But it doesn’t faze me. I know success when I see it. If I make a $1,325 profit on a golf club for a measly $175 loan, that’s a success, no matter who calls me a heartless miser.
One woman said I would burn in hell because I took away her dead mother’s diamond ring. I hear this kind of thing all the time. But a security interest is a security interest; shrieking women and hell have nothing to do with it. I loaned her $1,000 for a very nice antique ring worth about $9,400. She told me she lost her job at an insurance company two months before and she needed the cash to pay her rent. I gave her six months to get her ring back, at 12% interest per month—that was a discount rate, too. After six months, she had only paid me $456.21; she told me she still hadn’t found a job and had gotten on welfare. So I foreclosed on the ring. She started hollering and yelling about her dead mother right in the middle of the shop. She scared some customers away. I tried to console her. I said: “Well, you got $1,000 from me. You only paid me back $456.21. By law, I can’t report your default to a credit bureau, so actually I’m helping you out. Your credit is still good. Would you like to pawn something else?”
She didn’t listen. She started saying the devil would get me one day and that I was a predator. She stormed out of the shop sobbing and even threw a pamphlet up in the air.
That’s the last I saw of her. Two weeks later, I sold her mother’s ring for $9,000. That was a good day. By then I had completely forgotten about the outburst.
I don’t allow my emotions to interfere with my loan business. But that does not mean I am not happy. Just because I keep my emotions under control in the pawnshop does not mean I do not feel happy. To the contrary, I am very happy with my life. I made $976,812 last year after taxes. My inventory is worth $1,200,000 and I have a $2,000,000 credit line through First Wisconsin Bank, N.A. I never have to worry about loaning money because I have a strong customer base. That’s the great thing about security interests; if someone defaults, you just take their stuff and sell it. It’s a beautiful thing. You win even when you lose. I feel happy because I am in a good business position and I have plenty of money for myself.
Yet people keep telling me that I am not really happy. They say that I can’t be happy because I take advantage of people every day and “peddle negativity.” They say that pawnbrokers cannot be happy because they profit from misery, and happiness cannot coexist with misery.
This is nonsense. I know how I feel. I feel happy. What does it matter how I make my money? I have been very successful in my life. I provide a valuable economic service to people in the community. I help people survive tough times with fast cash. If it weren’t for me, people might not make their car payment, even if I wind up taking their bracelets or silver chains. I feel good about helping others, even if they can’t see it. I feel happy to live in a country that allows people to make informed economic decisions without government intrusion. Yes, I’ve done well. But isn’t that everyone’s end goal? Why should I not feel happy that I have made a lot of money pawnbroking?
Frankly, I don’t buy the argument that you can’t be happy if you deal in misery. Lots of other business profit from misery, or at least involve misery. Bankers deal in misery every day. So do lawyers, doctors, accountants and even psychotherapists. Yet no one says they can’t be happy. Why do people single out pawnbrokers for dealing out misery? Making money requires misery somewhere along the line; pawnbrokers are no different from anyone else. Someone needs to lose money in order for another person to make money. That’s going to make someone miserable. That’s called “economics.”
I don’t let others get me down. Ironically, most people who say I can’t be happy are unhappy themselves because they owe me money. How can they criticize me about something they don’t even know? They are just angry because they defaulted and I sold off their jewelry to some wholesaler.
To hell with my critics; I can speak for myself. Here’s what I know: I love security interests and I am happy about it. You don’t need to love other people in order to know happiness. Quite the contrary, I am living proof that you can love security interests and still be happy. Security interests are not people. They are property interests that guarantee that debtors will pay me back for a loan. Property interests don’t talk back, they don’t cheat and they don’t suffer depression or anxiety. They don’t cost money to feed and they don’t complain. They just sit there until you sell them. They increase in value sometimes, too. And they never lose their looks or get ornery. I simply can’t understand why people say that happiness can only flow from human relationships. In my experience, happiness flows much better from property relationships. Just look at my house; I did not buy it because I cultivated nurturing “human relationships.” Rather, I bought my house because I cultivated nurturing property relationships.
Property pays. People don’t. In that light, why bother with people?
Philosophers waste so much time debating about happiness. If they only knew how simple it could be. By loving security interests, I found happiness. Security interests opened the door to happiness for me. That is my precious secret. There is no need to love people. You simply must learn to love interests in property that secure payment or performance of obligations that run in your favor. When you love security interests, you don’t care what people say about you because they owe you money and you hold their lacquered dining room table as security. When you love security interests, the law lets you take stuff away from people without consequence. Security interests immunize you against anything people will ever say about you. Security interests save you from depending on people. In my book, that is a good recipe for happiness.
Tuesday, June 16, 2009
COMMITMENTS ARE UNREALISTIC AND USUALLY UNREASONABLE
AN ESSAY
We hear about “commitments” all the time. When we hear that a person has “commitments,” we tend to admire him. In the abstract, we link commitments with positive ideas, such as “a commitment to justice” or “a commitment to goodness.” But we make and break commitments all the time. They do not typically involve lofty ideals or premises. Rather, they concern the forgettable grist of life: Commerce, fleeting relationships, petty plans, timing, instrumental networking—stuff that ultimately no one remembers. Generally, there is nothing intrinsically special about commitments. Rather, they force human beings into a losing game, because commitments try to buck natural changes in life. Just live a few years to learn nothing stays the same for long in this world. That’s why it’s unrealistic—and usually unreasonable—to commit to anything. And in most cases there is nothing we can do about it.
So why do we admire commitments in the abstract? Let us start with the word. “To commit” has many meanings in English. For our purposes, the word’s most relevant meaning involves “pledging, obligation and assurance” to undertake future action or believe future thoughts. Dictionary.com specifies: “4. To bind or obligate, as by pledge or assurance.” A commitment, then, is a statement or promise to do or believe something long in advance. It obligates the speaker to do what he says, even if future events turn out in a completely unexpected way. It forces him into a dilemma between “his word” and the pressures of unforeseen reality. By making a “commitment,” the speaker takes a huge gamble that life will not twist away from him in the time it takes to keep his promise. If he loses the gamble and reneges on his commitment, others label him “dishonorable” and “unreliable.” If he wins the gamble and fulfills his word before circumstances turn on him, others label him “honorable,” “steadfast” and “resolute.” In both events, commitments are risky. If a commitment is long-term, there is a greater chance that intervening reality will undermine the circumstances necessary to fulfill it. But if it is short-term, life has a smaller window in which to unravel it.
Yet our society encourages us to make commitments all the time. In so doing, it leads us into dangerous territory. It insists that we “honor our word” to do things. But if life gets away from us and makes it impossible—or at least extremely difficult—to honor our word, we suffer excoriation for failure. The law adds more thematic baggage to the unofficial “dishonor” stigma that accompanies failure to fulfill commitments. In “regular life,” we make “unofficial” commitments. The law, however, recognizes special “official” commitments called “contracts.” While “regular life” penalizes our failure to adhere to commitments with social stigma and derision for “dishonor,” the law penalizes us in a highly technical way. In so doing, it gives official approval to the prevailing social convention that “commitments are good,” and “word-breaking is bad.” If a commitment fits the legal requirements of “contract,” it is more than just a commitment. It becomes a “cause of action” for money damages when some unlucky soul does not fulfill his word. Fault and circumstance have nothing to do with it. If a person does not do what he promised, the law penalizes him, no matter what the situation may be.
Whether in life or in law, commitments are troublesome. They ask us to ignore and defy inevitable changes that pursue us. In my view, it is not only unrealistic to make certain commitments, but also unfair. This is not to say that it is not admirable to make long-term commitments. It is merely to say that life changes far too much—and men are far too weak—to realistically deliver on many promises. In this sense, life and law overlap. Consider long-term mortgage contracts. Generally speaking, mortgage customers commit—both legally and grammatically—to pay a bank a certain amount every month for 30 years or more. Consider what can happen in one year, let alone thirty. Someone could get sick. Someone could get run over by a train. Someone could suffer crippling depression and lose their job. The economy could tank, causing widespread unemployment. A disaster could strike, destroying the house. Someone could get laid off. Someone could take a pay cut. Someone could have a crisis of conscience and refuse to take a paycheck from a corrupt organization. Someone could lose a limb. Someone could commit a crime and go to prison. Someone could cheat on a spouse, leading to marital strife, divorce, acrimony and reduced income. Someone could lose their parents, causing emotional turmoil. Or someone could just lose interest in life and commit suicide.
All this could happen in one year. Think about what can happen in thirty. Life whips us with unrelenting pressure, from both inside our souls and from the outside world. Yet the bank could care less: You made a commitment. You must pony up the payment every month—like you said you would—no matter what dramatic, unforeseen circumstances you might face. It doesn’t matter that you did not foresee trouble 15 years down the road. You made a commitment. The fact that both popular judgment and the law favor the bank’s position in this situation strikes me as fundamentally unfair—and unrealistic in the extreme. Realistically speaking, we cannot adhere to commitments. Life changes too much. What was normal on the day we signed the contract may no longer be normal five years later. But commitments bind us to our word even when it would be painful or absurd to continue following it. All this ensues because we “pledged ourselves” to an action. When we make commitments, we entirely assume the risk that life will not turn against us in the time it takes to fulfill our word. That is not smart.
Commitments, then, are unrealistic because they ask us to defy inevitable, unforeseen change in life. That is unreasonable because a reasonable person does not take action that is sure to fail. Reasonable people use their sense, experience and memory to judge future actions. If sense, experience and memory reveal that a certain action will likely not yield success, a reasonable person will refrain from engaging in it. Sense, experience and memory quickly reveal to us that life is unpredictable and volatile. What appears tranquil one day may be disrupted and toxic the next. Only a naïve person could ignore that. Why, then, do we continue to make doomed commitments every day? Simple: Because in many cases power plays a role in commitment.
We do not live in an equal society. In our commercial world, we need “things” that we do not have. In order to get what we don’t have, we must deal with people who do. That means we must enter into relationships with people who hold advantages over us, whether they are lenders, merchants, schools or retailers. These people want to make a profit on us, and it is easy to make a profit when you can define the rules of the relationship. If we want money from a bank because we can’t afford a home, they give it to us only if we commit ourselves to paying them back every month with twice as much interest. If we want money from a lender to go to school because we can’t afford tuition, they give it to us only if we commit ourselves to paying them back every month with three times as much interest. When we make our commitment, we do not really think about the future. What do we know what the future holds? We just need the money now, in 2009. We hope that we will have income to pay it back in 2014, 2024 and 2034. We don’t know what disaster might strike in 2013. We don’t know if we’ll lose our job in the financial crisis of 2021. We gamble that we will have the money every month to pay the bank because we made a commitment. Yet that commitment puts the risk on us that our lives will not inalterably change at some time before we fulfill our word. That is a huge risk. And it is an unreasonable one. We take it only because we must. In that sense, our commitments may be unrealistic and unreasonable, but we have little choice in the matter. Either we make an unfair, unrealistic or unreasonable commitment, or we do not get our tuition money. We gamble that we will have a better shot at life with an education, so we take the bet. In this sense, we make commitments in many cases because the relationship is skewed: The powerful party sets the terms, and we must follow.
Not all commitments reflect unequal commercial relationships. Emotional commitments, for instance, do not strictly involve money. Nonetheless, emotional commitments are just as unrealistic and unreasonable as financial commitments. Commitments are commitments, no matter the subject matter. They ask us to defy inevitable, unforeseen changes in life. In emotional commitments, changes can strike from the outside. But more often they originate in human weakness and inconstancy. Human beings’ tastes and desires vacillate as violently as the weather. When two people commit to each other emotionally, they play a dangerous game. They gamble that one or the other will not develop affections for anyone else at any time. They gamble that one or the other will not suffer injury or lose interest in the relationship at any time. They gamble that external pressures will not cause emotional rifts between them.
As was true in financial commitments, these are losing bets. Human beings are weak. They lust for others, no matter what commitments they have made to their mates. Their circumstances change over time, altering the way they look at their partners. The same goes for the other partner. Human beings do what makes them feel happy, not what enables them to fulfill their word. Naturally, this makes emotional commitments extremely difficult to maintain. After all, if the only thing maintaining an emotional relationship is the abstract desire to “keep one’s word” at the expense of happiness, it does not take a psychiatrist to understand that the bond will soon break. The quest for happiness is individual, not joint. It changes with time and circumstances. That leaves a lot of room for mischief in a “committed relationship.” In short, a lot can go wrong over time between two individual people who each want to be happy in their own way. That is why emotional commitments are just as unrealistic and unreasonable as financial commitments. No matter the subject matter, commitments defy change and time. That is why they are losing propositions.
I am certain that readers will find my premise here too pessimistic. My rhetoric might lead readers to think that I have no faith in commitments. This is not entirely true. I think that some commitments can work, and I admire people who adhere to their word no matter what curveballs life throws at them. Honor and commitment do go hand in hand; honorable people do what they promise. But in many cases honor has less to do with it than blind fortune. Some people live relatively changeless lives. Some people do not regularly suffer terrible upheavals or reversals. Some people make plans and no intervening events foil them. They can fulfill their commitments without complaint because nothing bad happens in the meantime. Is it honorable that they fulfill their word? Certainly. Nonetheless, they benefited from stability and changelessness. They could be honorable because nothing forced their hand. We cannot all be so lucky. Our choices do not always define our path in life. Sometimes we suffer reversals and hardship even if we make all the right moves. By contrast, sometimes everything turns out well even if we repeatedly make asinine decisions. Change affects us all differently. And that is really what determines whether we can fulfill commitments.
Honor means that we adhere to principle no matter the circumstances. It means that we take our commitments seriously. I like to think that I have honor. But I won’t deny that life has its own plan. More often than not, life interrupts our plans, alters our values and forces us to change our assumptions. We see things differently from year to year. And sometimes one year will deal us a disaster that fundamentally disrupts everything we thought was true about life. Time poses these challenges to us all. Thus, while it is good to have honor and to adhere to our word, I do not think it is wrong to modify our commitments when life chops the foundations out from under us. There is nothing honorable or spectacular about adhering to commitments when the very reason for those commitments has vanished. In fact, that would be unreasonable.
Yet honor wields a bothersome mystique. It tells us to feel guilty when we must abandon our word, even if life forces our hand in the matter. But should we feel guilty about reneging on a commitment that was unfair and unrealistic in the first place? Or are we to blame for making the commitment to start? At this point, I cannot ignore power. All too often we make commitments under pressure; and powerful parties use our own honor against us to make us feel bad about failing to live up to their unfair conditions. When we give our word to do something under unfair disadvantages, I do not think it dishonorable to renege if we lose the rigged game.
Of course, the law sees it differently. And the house always wins. “You made a commitment....we don't care what happened to you. Tough luck."
But for the grace of God go we all.
We hear about “commitments” all the time. When we hear that a person has “commitments,” we tend to admire him. In the abstract, we link commitments with positive ideas, such as “a commitment to justice” or “a commitment to goodness.” But we make and break commitments all the time. They do not typically involve lofty ideals or premises. Rather, they concern the forgettable grist of life: Commerce, fleeting relationships, petty plans, timing, instrumental networking—stuff that ultimately no one remembers. Generally, there is nothing intrinsically special about commitments. Rather, they force human beings into a losing game, because commitments try to buck natural changes in life. Just live a few years to learn nothing stays the same for long in this world. That’s why it’s unrealistic—and usually unreasonable—to commit to anything. And in most cases there is nothing we can do about it.
So why do we admire commitments in the abstract? Let us start with the word. “To commit” has many meanings in English. For our purposes, the word’s most relevant meaning involves “pledging, obligation and assurance” to undertake future action or believe future thoughts. Dictionary.com specifies: “4. To bind or obligate, as by pledge or assurance.” A commitment, then, is a statement or promise to do or believe something long in advance. It obligates the speaker to do what he says, even if future events turn out in a completely unexpected way. It forces him into a dilemma between “his word” and the pressures of unforeseen reality. By making a “commitment,” the speaker takes a huge gamble that life will not twist away from him in the time it takes to keep his promise. If he loses the gamble and reneges on his commitment, others label him “dishonorable” and “unreliable.” If he wins the gamble and fulfills his word before circumstances turn on him, others label him “honorable,” “steadfast” and “resolute.” In both events, commitments are risky. If a commitment is long-term, there is a greater chance that intervening reality will undermine the circumstances necessary to fulfill it. But if it is short-term, life has a smaller window in which to unravel it.
Yet our society encourages us to make commitments all the time. In so doing, it leads us into dangerous territory. It insists that we “honor our word” to do things. But if life gets away from us and makes it impossible—or at least extremely difficult—to honor our word, we suffer excoriation for failure. The law adds more thematic baggage to the unofficial “dishonor” stigma that accompanies failure to fulfill commitments. In “regular life,” we make “unofficial” commitments. The law, however, recognizes special “official” commitments called “contracts.” While “regular life” penalizes our failure to adhere to commitments with social stigma and derision for “dishonor,” the law penalizes us in a highly technical way. In so doing, it gives official approval to the prevailing social convention that “commitments are good,” and “word-breaking is bad.” If a commitment fits the legal requirements of “contract,” it is more than just a commitment. It becomes a “cause of action” for money damages when some unlucky soul does not fulfill his word. Fault and circumstance have nothing to do with it. If a person does not do what he promised, the law penalizes him, no matter what the situation may be.
Whether in life or in law, commitments are troublesome. They ask us to ignore and defy inevitable changes that pursue us. In my view, it is not only unrealistic to make certain commitments, but also unfair. This is not to say that it is not admirable to make long-term commitments. It is merely to say that life changes far too much—and men are far too weak—to realistically deliver on many promises. In this sense, life and law overlap. Consider long-term mortgage contracts. Generally speaking, mortgage customers commit—both legally and grammatically—to pay a bank a certain amount every month for 30 years or more. Consider what can happen in one year, let alone thirty. Someone could get sick. Someone could get run over by a train. Someone could suffer crippling depression and lose their job. The economy could tank, causing widespread unemployment. A disaster could strike, destroying the house. Someone could get laid off. Someone could take a pay cut. Someone could have a crisis of conscience and refuse to take a paycheck from a corrupt organization. Someone could lose a limb. Someone could commit a crime and go to prison. Someone could cheat on a spouse, leading to marital strife, divorce, acrimony and reduced income. Someone could lose their parents, causing emotional turmoil. Or someone could just lose interest in life and commit suicide.
All this could happen in one year. Think about what can happen in thirty. Life whips us with unrelenting pressure, from both inside our souls and from the outside world. Yet the bank could care less: You made a commitment. You must pony up the payment every month—like you said you would—no matter what dramatic, unforeseen circumstances you might face. It doesn’t matter that you did not foresee trouble 15 years down the road. You made a commitment. The fact that both popular judgment and the law favor the bank’s position in this situation strikes me as fundamentally unfair—and unrealistic in the extreme. Realistically speaking, we cannot adhere to commitments. Life changes too much. What was normal on the day we signed the contract may no longer be normal five years later. But commitments bind us to our word even when it would be painful or absurd to continue following it. All this ensues because we “pledged ourselves” to an action. When we make commitments, we entirely assume the risk that life will not turn against us in the time it takes to fulfill our word. That is not smart.
Commitments, then, are unrealistic because they ask us to defy inevitable, unforeseen change in life. That is unreasonable because a reasonable person does not take action that is sure to fail. Reasonable people use their sense, experience and memory to judge future actions. If sense, experience and memory reveal that a certain action will likely not yield success, a reasonable person will refrain from engaging in it. Sense, experience and memory quickly reveal to us that life is unpredictable and volatile. What appears tranquil one day may be disrupted and toxic the next. Only a naïve person could ignore that. Why, then, do we continue to make doomed commitments every day? Simple: Because in many cases power plays a role in commitment.
We do not live in an equal society. In our commercial world, we need “things” that we do not have. In order to get what we don’t have, we must deal with people who do. That means we must enter into relationships with people who hold advantages over us, whether they are lenders, merchants, schools or retailers. These people want to make a profit on us, and it is easy to make a profit when you can define the rules of the relationship. If we want money from a bank because we can’t afford a home, they give it to us only if we commit ourselves to paying them back every month with twice as much interest. If we want money from a lender to go to school because we can’t afford tuition, they give it to us only if we commit ourselves to paying them back every month with three times as much interest. When we make our commitment, we do not really think about the future. What do we know what the future holds? We just need the money now, in 2009. We hope that we will have income to pay it back in 2014, 2024 and 2034. We don’t know what disaster might strike in 2013. We don’t know if we’ll lose our job in the financial crisis of 2021. We gamble that we will have the money every month to pay the bank because we made a commitment. Yet that commitment puts the risk on us that our lives will not inalterably change at some time before we fulfill our word. That is a huge risk. And it is an unreasonable one. We take it only because we must. In that sense, our commitments may be unrealistic and unreasonable, but we have little choice in the matter. Either we make an unfair, unrealistic or unreasonable commitment, or we do not get our tuition money. We gamble that we will have a better shot at life with an education, so we take the bet. In this sense, we make commitments in many cases because the relationship is skewed: The powerful party sets the terms, and we must follow.
Not all commitments reflect unequal commercial relationships. Emotional commitments, for instance, do not strictly involve money. Nonetheless, emotional commitments are just as unrealistic and unreasonable as financial commitments. Commitments are commitments, no matter the subject matter. They ask us to defy inevitable, unforeseen changes in life. In emotional commitments, changes can strike from the outside. But more often they originate in human weakness and inconstancy. Human beings’ tastes and desires vacillate as violently as the weather. When two people commit to each other emotionally, they play a dangerous game. They gamble that one or the other will not develop affections for anyone else at any time. They gamble that one or the other will not suffer injury or lose interest in the relationship at any time. They gamble that external pressures will not cause emotional rifts between them.
As was true in financial commitments, these are losing bets. Human beings are weak. They lust for others, no matter what commitments they have made to their mates. Their circumstances change over time, altering the way they look at their partners. The same goes for the other partner. Human beings do what makes them feel happy, not what enables them to fulfill their word. Naturally, this makes emotional commitments extremely difficult to maintain. After all, if the only thing maintaining an emotional relationship is the abstract desire to “keep one’s word” at the expense of happiness, it does not take a psychiatrist to understand that the bond will soon break. The quest for happiness is individual, not joint. It changes with time and circumstances. That leaves a lot of room for mischief in a “committed relationship.” In short, a lot can go wrong over time between two individual people who each want to be happy in their own way. That is why emotional commitments are just as unrealistic and unreasonable as financial commitments. No matter the subject matter, commitments defy change and time. That is why they are losing propositions.
I am certain that readers will find my premise here too pessimistic. My rhetoric might lead readers to think that I have no faith in commitments. This is not entirely true. I think that some commitments can work, and I admire people who adhere to their word no matter what curveballs life throws at them. Honor and commitment do go hand in hand; honorable people do what they promise. But in many cases honor has less to do with it than blind fortune. Some people live relatively changeless lives. Some people do not regularly suffer terrible upheavals or reversals. Some people make plans and no intervening events foil them. They can fulfill their commitments without complaint because nothing bad happens in the meantime. Is it honorable that they fulfill their word? Certainly. Nonetheless, they benefited from stability and changelessness. They could be honorable because nothing forced their hand. We cannot all be so lucky. Our choices do not always define our path in life. Sometimes we suffer reversals and hardship even if we make all the right moves. By contrast, sometimes everything turns out well even if we repeatedly make asinine decisions. Change affects us all differently. And that is really what determines whether we can fulfill commitments.
Honor means that we adhere to principle no matter the circumstances. It means that we take our commitments seriously. I like to think that I have honor. But I won’t deny that life has its own plan. More often than not, life interrupts our plans, alters our values and forces us to change our assumptions. We see things differently from year to year. And sometimes one year will deal us a disaster that fundamentally disrupts everything we thought was true about life. Time poses these challenges to us all. Thus, while it is good to have honor and to adhere to our word, I do not think it is wrong to modify our commitments when life chops the foundations out from under us. There is nothing honorable or spectacular about adhering to commitments when the very reason for those commitments has vanished. In fact, that would be unreasonable.
Yet honor wields a bothersome mystique. It tells us to feel guilty when we must abandon our word, even if life forces our hand in the matter. But should we feel guilty about reneging on a commitment that was unfair and unrealistic in the first place? Or are we to blame for making the commitment to start? At this point, I cannot ignore power. All too often we make commitments under pressure; and powerful parties use our own honor against us to make us feel bad about failing to live up to their unfair conditions. When we give our word to do something under unfair disadvantages, I do not think it dishonorable to renege if we lose the rigged game.
Of course, the law sees it differently. And the house always wins. “You made a commitment....we don't care what happened to you. Tough luck."
But for the grace of God go we all.
Tuesday, May 12, 2009
WHY IT IS GOOD TO HAVE MONEY
AN EDITORIAL
By : Mr. Arnold F. Silver, Esq., Partner, Gold, Diamond, Silver & Greener, P.C., Attorneys Specializing in Commercial Paper, Finance, Banking & International Currency Transactions.
I was asked to write an essay about our law practice. I decided, however, that it would be much more appropriate merely to explain why it is good to have money. Legal questions and money questions generally go hand in hand. For that reason, writing about money is the same as writing about legal practice. Suffice it to say, when we practice law at our firm, we talk about money—whether directly, indirectly, figuratively, literally, symbolically, by implication or by insinuation—all the time. And it is certainly our goal. Put simply, we do not get up in the morning thinking about helping clients with our unique legal knowledge. We get up in the morning thinking about how much money the firm will make each day. Having clarified why I am writing, I will now discuss why it is good to have money.
I have money. You don’t. I like the way I feel. You don’t. I can buy a car and a house without anxiety. I can make all my payments every month, plus have money left over in all my accounts. I can drive to work and drive home, then comfortably watch television before going to bed on a very soft mattress. You worry all the time whether you will have enough cash at month’s end to stay in your apartment. I send my laundry to be cleaned and pressed every week. I can afford it. You can’t. You live in rumpled clothes because you don’t have the money or time to wash them regularly. I can go on long vacations with my wife because I have a lot of extra money. I can sit on the beach for several weeks knowing that my house and car will be there when I get home. You can’t go on vacation. You can barely buy groceries. You can’t go anywhere. You have to think about getting money to eat. In essence, it is better to be me than you. It is good to have money.
I run a business and I get all the proceeds. You work for someone and get a few dollars in return. I feel perfectly normal each day giving instructions to my employees. You feel awful each day taking peremptory commands from your bosses. At the end of each quarter, my partners and I divide up the surplus revenue, giving me a large cash bonus. You get an insulting paycheck. I make a lot more money than you because I own more than you do. You make a lot less money than I do because you own nothing. You don’t have the money to own anything, either. I will keep my money and stay the way I am. You will keep making a few dollars and stay the way you are. I am doing better than you because I have money. You are doing worse than I am because you don’t have money. This again proves that it is good to have money.
I have investments because I have extra money to spend on them. You can’t make investments because you have no extra money. I make a lot of extra money from my real estate investments, money markets and stocks. You do not have any real estate investments, money markets or stocks because you can’t afford them. I feel good knowing that I have profitable investments. You feel panicked and terrified that you have almost nothing in the bank. I have a portfolio that generates income each month without any effort on my part. You do not have a portfolio and you generate no income if you don’t work. I own property and I can do what I want with it when I want to. You own no property and you have to listen to your landlord. You wish you had what I have. But you don’t. Money gave me what I have, so it is good to have money.
I can help people like you because I have money. You want to change your life. You want to make money. But before you can, you need a loan. I can give you a loan because I have money. You need money to pay for your necessities and go to school. You need me so you can finally make more money. I don’t need the money; you do. I am doing fine. You aren’t; that’s why you need a loan. If I give you a loan, you will have my money. But I want my money back—plus more. You might have my money for a while, but in the end, I will have my money back, plus a lot of yours. You need my money. But in the end I will have yours. I don’t really need your money. Yet no one gets my money without giving me theirs. That wouldn’t be fair. No one gives away money for free. And you need a loan, don’t you? I don’t have to worry. You do. I have money. You don’t. You wouldn’t be asking for a loan if you did. In a word, it is good to have money. You don’t have to ask for loans when you already have money.
I do not have many problems because I have money. You have a lot more problems than I do because you have no money. Life is better when there are fewer problems. Life is worse when there are more problems. Money eliminates many problems. That is why I have fewer problems than you. It is better to have only a few problems than many problems. We both might have problems with relationships. But I do not worry about rent, food, gas bills, air conditioning costs, loan debt, my job, medical care, my credit score or my bank balance. You worry about all these things and relationships. I only worry about relationships. So you have lot more problems than I do. That means I have a better life because I have money. You have a worse life because you don’t.
I can make my money work for me. I can charge interest. I can open trust accounts. I can diversify my funds. You don’t even have funds, so you can’t diversify them. You can’t open trust accounts or charge interest, either, because you don’t have any money. Money can’t work for you if you don’t have any. It feels good to know that your money is working for you, because then you don’t have to work as hard. But you feel terrible now because you have to do all the work. After all, your money isn’t working for you because you do not have any money. You wish you were me because I have money. You can’t be me until you have money. And you don’t. My money works for me and I feel good about it. You have no money at all and you feel bad about it. For that reason, it is good to have money. In any event, it is better to have money than not to have money.
In my opinion, my life is better than yours. Typically, I do not make moral judgments. Rather, I make financial judgments based solely on figures and potential profitability. In some cases, however, I can make moral judgments based upon financial considerations. In this case, I can say that I am happier than you. I am happier because I am less anxious, nervous, angry, scared, upset, stressed, depressed, resentful and desperate than you. Furthermore, I experience more bodily comfort, pleasure, delight and enjoyment than you because I do not worry as much about money matters. You occasionally experience bodily comfort, pleasure, delight and enjoyment. But more often you are nervous, angry, scared, upset, stressed, depressed, resentful and desperate because you do not have enough money to pay your bills. You live in uncertainty. Uncertainty makes it impossible to relax and feel good. By contrast, I feel certain every day that I have more than enough money to pay any bill that comes my way, even a bill for unexpected dental work. That certainty eliminates any negative emotions I might feel. I do not feel resentful; why should I? I do not take instructions; I give them. I do not have to be somewhere everyday at 7 AM; my employees do. I do not wait until someone tells me I can leave my desk; I tell my employees when they can leave. I make my own hours, I go where I wish and I don’t suffer for it. Why? Because I have money. Money makes me free and happy. You don’t have money. You are not free and you are unhappy. You would rather be free and happy. But you can’t be either free or happy until you have money. I have money. As a financial and moral matter, that gives me a better life than you.
In conclusion, it is good to have money because it brings freedom, happiness, certainty, power and self-determination. By contrast, it is bad not to have money because it leads to bondage, powerlessness, debt, unhappiness, uncertainty, indignity, shame, contempt, resentment and anxiety. I have money. You don’t. I am happy and free. You aren’t.
I am glad I live in a country that lets me have money. You live in the same country, so what are you whining about? Stop sulking. Go make some money. Make yourself happy and free.
Remember: You can always get a loan from me.
By : Mr. Arnold F. Silver, Esq., Partner, Gold, Diamond, Silver & Greener, P.C., Attorneys Specializing in Commercial Paper, Finance, Banking & International Currency Transactions.
I was asked to write an essay about our law practice. I decided, however, that it would be much more appropriate merely to explain why it is good to have money. Legal questions and money questions generally go hand in hand. For that reason, writing about money is the same as writing about legal practice. Suffice it to say, when we practice law at our firm, we talk about money—whether directly, indirectly, figuratively, literally, symbolically, by implication or by insinuation—all the time. And it is certainly our goal. Put simply, we do not get up in the morning thinking about helping clients with our unique legal knowledge. We get up in the morning thinking about how much money the firm will make each day. Having clarified why I am writing, I will now discuss why it is good to have money.
I have money. You don’t. I like the way I feel. You don’t. I can buy a car and a house without anxiety. I can make all my payments every month, plus have money left over in all my accounts. I can drive to work and drive home, then comfortably watch television before going to bed on a very soft mattress. You worry all the time whether you will have enough cash at month’s end to stay in your apartment. I send my laundry to be cleaned and pressed every week. I can afford it. You can’t. You live in rumpled clothes because you don’t have the money or time to wash them regularly. I can go on long vacations with my wife because I have a lot of extra money. I can sit on the beach for several weeks knowing that my house and car will be there when I get home. You can’t go on vacation. You can barely buy groceries. You can’t go anywhere. You have to think about getting money to eat. In essence, it is better to be me than you. It is good to have money.
I run a business and I get all the proceeds. You work for someone and get a few dollars in return. I feel perfectly normal each day giving instructions to my employees. You feel awful each day taking peremptory commands from your bosses. At the end of each quarter, my partners and I divide up the surplus revenue, giving me a large cash bonus. You get an insulting paycheck. I make a lot more money than you because I own more than you do. You make a lot less money than I do because you own nothing. You don’t have the money to own anything, either. I will keep my money and stay the way I am. You will keep making a few dollars and stay the way you are. I am doing better than you because I have money. You are doing worse than I am because you don’t have money. This again proves that it is good to have money.
I have investments because I have extra money to spend on them. You can’t make investments because you have no extra money. I make a lot of extra money from my real estate investments, money markets and stocks. You do not have any real estate investments, money markets or stocks because you can’t afford them. I feel good knowing that I have profitable investments. You feel panicked and terrified that you have almost nothing in the bank. I have a portfolio that generates income each month without any effort on my part. You do not have a portfolio and you generate no income if you don’t work. I own property and I can do what I want with it when I want to. You own no property and you have to listen to your landlord. You wish you had what I have. But you don’t. Money gave me what I have, so it is good to have money.
I can help people like you because I have money. You want to change your life. You want to make money. But before you can, you need a loan. I can give you a loan because I have money. You need money to pay for your necessities and go to school. You need me so you can finally make more money. I don’t need the money; you do. I am doing fine. You aren’t; that’s why you need a loan. If I give you a loan, you will have my money. But I want my money back—plus more. You might have my money for a while, but in the end, I will have my money back, plus a lot of yours. You need my money. But in the end I will have yours. I don’t really need your money. Yet no one gets my money without giving me theirs. That wouldn’t be fair. No one gives away money for free. And you need a loan, don’t you? I don’t have to worry. You do. I have money. You don’t. You wouldn’t be asking for a loan if you did. In a word, it is good to have money. You don’t have to ask for loans when you already have money.
I do not have many problems because I have money. You have a lot more problems than I do because you have no money. Life is better when there are fewer problems. Life is worse when there are more problems. Money eliminates many problems. That is why I have fewer problems than you. It is better to have only a few problems than many problems. We both might have problems with relationships. But I do not worry about rent, food, gas bills, air conditioning costs, loan debt, my job, medical care, my credit score or my bank balance. You worry about all these things and relationships. I only worry about relationships. So you have lot more problems than I do. That means I have a better life because I have money. You have a worse life because you don’t.
I can make my money work for me. I can charge interest. I can open trust accounts. I can diversify my funds. You don’t even have funds, so you can’t diversify them. You can’t open trust accounts or charge interest, either, because you don’t have any money. Money can’t work for you if you don’t have any. It feels good to know that your money is working for you, because then you don’t have to work as hard. But you feel terrible now because you have to do all the work. After all, your money isn’t working for you because you do not have any money. You wish you were me because I have money. You can’t be me until you have money. And you don’t. My money works for me and I feel good about it. You have no money at all and you feel bad about it. For that reason, it is good to have money. In any event, it is better to have money than not to have money.
In my opinion, my life is better than yours. Typically, I do not make moral judgments. Rather, I make financial judgments based solely on figures and potential profitability. In some cases, however, I can make moral judgments based upon financial considerations. In this case, I can say that I am happier than you. I am happier because I am less anxious, nervous, angry, scared, upset, stressed, depressed, resentful and desperate than you. Furthermore, I experience more bodily comfort, pleasure, delight and enjoyment than you because I do not worry as much about money matters. You occasionally experience bodily comfort, pleasure, delight and enjoyment. But more often you are nervous, angry, scared, upset, stressed, depressed, resentful and desperate because you do not have enough money to pay your bills. You live in uncertainty. Uncertainty makes it impossible to relax and feel good. By contrast, I feel certain every day that I have more than enough money to pay any bill that comes my way, even a bill for unexpected dental work. That certainty eliminates any negative emotions I might feel. I do not feel resentful; why should I? I do not take instructions; I give them. I do not have to be somewhere everyday at 7 AM; my employees do. I do not wait until someone tells me I can leave my desk; I tell my employees when they can leave. I make my own hours, I go where I wish and I don’t suffer for it. Why? Because I have money. Money makes me free and happy. You don’t have money. You are not free and you are unhappy. You would rather be free and happy. But you can’t be either free or happy until you have money. I have money. As a financial and moral matter, that gives me a better life than you.
In conclusion, it is good to have money because it brings freedom, happiness, certainty, power and self-determination. By contrast, it is bad not to have money because it leads to bondage, powerlessness, debt, unhappiness, uncertainty, indignity, shame, contempt, resentment and anxiety. I have money. You don’t. I am happy and free. You aren’t.
I am glad I live in a country that lets me have money. You live in the same country, so what are you whining about? Stop sulking. Go make some money. Make yourself happy and free.
Remember: You can always get a loan from me.
Saturday, September 20, 2008
OESTERHOUDT STRIKES
I do not own a consumer credit card. I buy things only when I know I have the money to pay for them, despite the dozens of solicitations I receive in the mail from credit card companies every month. Of course, that does not mean I am not in debt. My education sank me into more debt than Best Buy or GMC ever could. There was no other way for me to go to school; I had to become a debtor. I did not have $35,000 in cash each year, so I went to the bank and applied for loans. Now, more than two years after beginning to pay back my loans, I actually owe more than the amount I initially borrowed. "How can that be?" you ask. Ah, there is a price to making minimum payments, namely: "accruing recapitalized interest." Basically, it means the interest gets added to the amount you borrowed. And bigger numbers yield more interest per month, so it's an upward spiral. There is no sense trying to fight this. It's all allowed under the fine print contract. And I signed the contract while technically sane, so the law favors the bank. Sure, I needed the money to go to school, but terms are terms. It doesn't matter why you signed; it only matters that you signed. In our system, you can bargain for anything, even if you do not remember--or even really know--what you signed. That's the law.
Still, I prefer not to grant power to a creditor unless I have to. I think my education was a wise credit purchase, even though I will be paying for it until I'm in my 60s. I feel I had no choice but debt in those circumstances. But I do have a choice whether to go into consumer debt, and that is why I don't own a credit card.
Consumer credit card companies are evil. They profit from the worst, most childlike impulses that lurk in human hearts. They encourage people to go into debt by deluding them into thinking they can "get things they want" without actually paying for them. We must not forget that American society is a pervasively commercial society. Every day, we see shiny new things on television. The images burn themselves onto our minds; it is sensory. Human beings respond to what they sense, and that is why we hunger to buy what we've perceived. Advertisers play to our senses. They show us things that excite us on some level; they tell us only good things about them, heightening our excitement. They appeal to our eyes and ears. Their sensory overtures excite our emotions, not our minds. It all adds up to a ceaseless sensory barrage calculated to make you want to buy things, without even really knowing why. Credit card companies provide the means to succumb to the "buying urge."
Credit card companies have completely hypnotized the American public. Most consumers do not realize what has happened to them until it is too late. Dazzled by the sensory parade that led them to the retailer, they do not read the contracts that reduce them to perpetual debtors. Consumers want to sate the commercial lust that advertisers awakened in them; and they will sign anything to do so. To lure consumers into signing obscenely unfair contracts, credit card companies employ a host of tactics. Today, I will address only one: the "free cash back" offer.
It goes something like this: A credit card company tells both existing and potential cardholders that it will "give them $100 free if they purchase more goods with their cards." Consumers, who rarely analyze commercial messages, jump at the chance to "get $100 free." So they run out and charge $1000 on their cards. In return, the credit card company reduces their outstanding balance by $100.
This is not "free money." In essence, the credit card company induced the consumer to incur $900 net debt for a $100 gain. Any ploy that makes you incur more debt will not allow you to make a net gain. The $100 was not "free;" you paid $900 for it. Sure, you might not have to pay the $900 all at once, but it is an interest-bearing kernel that will continue to yield profits for the credit card company for years to come. And if you default, the credit card company will sell your account to someone else; they will get paid somehow, and they have a legal right to every penny. You, by contrast, have no defense at all. So what good is your "free $100" then?
Why does this bother me? It bothers me for several reasons. First, I do not like the fact that credit card companies profit from reducing millions of Americans to financial servitude. This is a debtor nation. It is difficult to see how an economy can truly flourish when millions of people have net worth in the negative figures. That is the opposite of wealth.
Second, I do not like the fact that credit card companies prey on the commercial and sensory weaknesses of American consumers. In this country, people literally lust for material objects. Advertising and continuous sensory bombardment excite consumers into a buying frenzy, even when it is not financially possible for them to buy anything. Credit card companies furnish a means to succumb to this irrational commercial behavior. That behavior, in turn, enriches the credit card company while it reduces the consumer to perpetual debt. In essence, credit card companies make money by exploiting human weakness.
Third, I do not like the fact that credit card advertising conceals the truth. It is exceedingly difficult to ascertain the subtle distortions that underlie any commercial message. Credit card offers for "free cash back" or "no-interest financing" are not what they purport to be. States require advertisers to disclose the negative implications behind any claim, but those disclosures need not be conspicuous or obvious. Credit card companies take full advantage; they never explain that "free cash back" means actually incurring more debt and yielding even more financial control to the credit card company.
Finally, credit card companies enjoy far too much power in our society. There is no equality at all between the individual consumer and the massively powerful credit card company. The credit card company dictates all the terms and enjoys all the legal advantages. Credit card companies know their contract law. They know that contract law shields them from claims that their credit agreements are "unfair" because consumers "voluntarily" entered into them. Yet there is a difference between "legal unfairness" and "actual unfairness." Relationships between credit card companies and individual consumers are "actually unfair," even if the law considers them perfectly valid. It is unfair to saddle a consumer with 18% interest for missing one payment. It is unfair to force him to travel to distant States to attend arbitration in case of dispute. And it is unfair to mislead him into thinking he is making "Free Money" by incurring more debt. Common decency tell us this, not the law. In essence, credit card companies dominate their subjects with legally-sanctioned oppression. They have all the advantages, make all the money and bear almost no risk. And they get away with it because they prey on consumers' commercial weaknesses. It is a form of absolute, private, contractual tyranny.
Do not be a debtor unless you must be a debtor. Credit card companies can only achieve their grip on a consumer if the consumer takes the fateful step to enter the relationship. The problem is that all too many consumers take that step while burning with commercial lust. To avoid the prison of debt, you must use your reason and think critically. Credit card companies dissuade consumers from both. If you understand how credit card companies operate, you can avoid their chains. This is America, after all: We should have the power to resist private tyranny, no matter how much it entices us.
Still, I prefer not to grant power to a creditor unless I have to. I think my education was a wise credit purchase, even though I will be paying for it until I'm in my 60s. I feel I had no choice but debt in those circumstances. But I do have a choice whether to go into consumer debt, and that is why I don't own a credit card.
Consumer credit card companies are evil. They profit from the worst, most childlike impulses that lurk in human hearts. They encourage people to go into debt by deluding them into thinking they can "get things they want" without actually paying for them. We must not forget that American society is a pervasively commercial society. Every day, we see shiny new things on television. The images burn themselves onto our minds; it is sensory. Human beings respond to what they sense, and that is why we hunger to buy what we've perceived. Advertisers play to our senses. They show us things that excite us on some level; they tell us only good things about them, heightening our excitement. They appeal to our eyes and ears. Their sensory overtures excite our emotions, not our minds. It all adds up to a ceaseless sensory barrage calculated to make you want to buy things, without even really knowing why. Credit card companies provide the means to succumb to the "buying urge."
Credit card companies have completely hypnotized the American public. Most consumers do not realize what has happened to them until it is too late. Dazzled by the sensory parade that led them to the retailer, they do not read the contracts that reduce them to perpetual debtors. Consumers want to sate the commercial lust that advertisers awakened in them; and they will sign anything to do so. To lure consumers into signing obscenely unfair contracts, credit card companies employ a host of tactics. Today, I will address only one: the "free cash back" offer.
It goes something like this: A credit card company tells both existing and potential cardholders that it will "give them $100 free if they purchase more goods with their cards." Consumers, who rarely analyze commercial messages, jump at the chance to "get $100 free." So they run out and charge $1000 on their cards. In return, the credit card company reduces their outstanding balance by $100.
This is not "free money." In essence, the credit card company induced the consumer to incur $900 net debt for a $100 gain. Any ploy that makes you incur more debt will not allow you to make a net gain. The $100 was not "free;" you paid $900 for it. Sure, you might not have to pay the $900 all at once, but it is an interest-bearing kernel that will continue to yield profits for the credit card company for years to come. And if you default, the credit card company will sell your account to someone else; they will get paid somehow, and they have a legal right to every penny. You, by contrast, have no defense at all. So what good is your "free $100" then?
Why does this bother me? It bothers me for several reasons. First, I do not like the fact that credit card companies profit from reducing millions of Americans to financial servitude. This is a debtor nation. It is difficult to see how an economy can truly flourish when millions of people have net worth in the negative figures. That is the opposite of wealth.
Second, I do not like the fact that credit card companies prey on the commercial and sensory weaknesses of American consumers. In this country, people literally lust for material objects. Advertising and continuous sensory bombardment excite consumers into a buying frenzy, even when it is not financially possible for them to buy anything. Credit card companies furnish a means to succumb to this irrational commercial behavior. That behavior, in turn, enriches the credit card company while it reduces the consumer to perpetual debt. In essence, credit card companies make money by exploiting human weakness.
Third, I do not like the fact that credit card advertising conceals the truth. It is exceedingly difficult to ascertain the subtle distortions that underlie any commercial message. Credit card offers for "free cash back" or "no-interest financing" are not what they purport to be. States require advertisers to disclose the negative implications behind any claim, but those disclosures need not be conspicuous or obvious. Credit card companies take full advantage; they never explain that "free cash back" means actually incurring more debt and yielding even more financial control to the credit card company.
Finally, credit card companies enjoy far too much power in our society. There is no equality at all between the individual consumer and the massively powerful credit card company. The credit card company dictates all the terms and enjoys all the legal advantages. Credit card companies know their contract law. They know that contract law shields them from claims that their credit agreements are "unfair" because consumers "voluntarily" entered into them. Yet there is a difference between "legal unfairness" and "actual unfairness." Relationships between credit card companies and individual consumers are "actually unfair," even if the law considers them perfectly valid. It is unfair to saddle a consumer with 18% interest for missing one payment. It is unfair to force him to travel to distant States to attend arbitration in case of dispute. And it is unfair to mislead him into thinking he is making "Free Money" by incurring more debt. Common decency tell us this, not the law. In essence, credit card companies dominate their subjects with legally-sanctioned oppression. They have all the advantages, make all the money and bear almost no risk. And they get away with it because they prey on consumers' commercial weaknesses. It is a form of absolute, private, contractual tyranny.
Do not be a debtor unless you must be a debtor. Credit card companies can only achieve their grip on a consumer if the consumer takes the fateful step to enter the relationship. The problem is that all too many consumers take that step while burning with commercial lust. To avoid the prison of debt, you must use your reason and think critically. Credit card companies dissuade consumers from both. If you understand how credit card companies operate, you can avoid their chains. This is America, after all: We should have the power to resist private tyranny, no matter how much it entices us.
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