In reality this is a lot more complicated but this basis understanding allows us to look at other, more important and, for me, historically interesting things. Let me begin by saying that debt is a serious problem for a lot of people. You have probably read the stats yourself and so you know that the poorest Canadians are actually getting poorer. What does that mean? It means that the poorest Canadians are going backwards. Far from simply making less money than other Canadians (and so the relative gap between classes widens), they appear to be actually losing money (I got my info from the Broadbent Institute). Debt, IOW, can and does occur for a range of reasons and some of those reasons are simply outside of the control of some people. Stereotypes to one side, losing one's job when the factory closes down, say, is a good way to get into debt fast.
What about saving for a rainy day? The news story I cited in my last post suggests that Canadians are not very good at that and, frankly, that is part of the story I want to tell. Why is that? It is because debt has been naturalized as a good and normal thing. Years ago, a relative who was carrying a lot of debt went to the bank. I was disturbed by their debt services payments (the minimum they had to pay and told them so. IOW, I argued that they were carrying too much debt). Their banker said the opposite: not at all; most people have this much debt. Six months later, the bank refused an application for more credit and ... my relative's business went under.
I don't think the banker was lying. I don't think the debt level was unusual. But I think it is problematic. The naturalization of debt that has occurred in Canada is the product of a series of historical developments. These include:
- The democratization of credit (it is no longer for the upper class)
- The development of a set of national institution that manage debt (including, as we saw in 2007-8, the stock market, insurance companies, banks, credit card companies, etc.)
- Encouragement by the government
- A shift in cultural values
- Seem progressive when they are not
- Ensure that students pay more for education than the advertised price because they have to cover interest charges
- Keep the burden of financing on students themselves (something that is more and more true over the last generation)
- Do little to enhance equal opportunity or social mobility and may, in fact, work against it
- Disguise the fact that we have options and choice with regard to educational financing
- Ensure that individuals begin their adult lives in debt