Tuesday, November 22, 2011

Debts or rights?

Some things — education, health, housing — should be rights, not financed through taking on more and more debt.
...while the previous decade has been represented as a debt-financed spending binge when consumers lived well beyond their means, it turns a complex story into a morality play. A major part of the credit ‘binge’ was about necessities, not luxuries. Sub-prime mortgages (especially with the decline of affordable housing) were the only way for many to become homeowners. Similarly, student loans were the only way for many to gain access to higher education and thus participate as equals in the radically unequal distribution of opportunity in the United States. The total value of student loans has surpassed total credit card debt, and is projected to top $1 trillion later this year....
...Once again, indebtedness is the product of the 99% trying to meet the costs of a basic good — health care....
The entire social model, then, was built on a lie. The separation of consumption (financed by future promises to pay) from production (based on limiting present ability to earn) was a mirage. The problem has been that the underlying right to maintain a certain standard of living, or even to access to certain basic social goods like housing, health, and education, was just that: implicit. Every so often, of course, it was made somewhat public — for instance when Clintonor Bush would say something about providing housing to the poor and minorities who could not otherwise afford it (mainly by changing market incentives and promoting sub-prime borrowing, as it turned out). But this promise was always implicit and had to stay that way because it was mediated through the credit system. Access to these basic social goods was never a fully public claim each individual had against society. Instead, access to these social goods was a matter of a complex series of private, individualized claims against other private institutions like banks and employers, with the public role submerged in the form of altered market incentives. That is the difference between debt and right, and it is clear that the debt-based social model has failed.
 Read the whole post at New Deal 2.0

A Failed Social Model: Providing Basic Goods Through Crushing Consumer Debt
by Alex Gourevitch


Carlos said...

What rights do we have as mere humans?

Only the hardworking, prudent, able bodied, virtuous winners (and offspring) have rights.

The rest are chopped liver and potential cannon fodder. No progress in the last 100 years then.

Ralph Musgrave said...

That New Deal article claims that “home ownership” is a basic human right. Complete nonsense! Having a roof over your head is no doubt a basic human right, but that right can be met by renting rather than owning. Germany is about the wealthiest country in Europe and has the lowest level of home ownership. Anyone know of any severe social problems in Germany as a result of Germans’ preference for renting rather than owning?

Tom Hickey said...

Ralph, Americans look on home wonership differently than many other countries. It's why Congress created Fannie and Freddie, for example.

I think that argument most Americans would agree with is that all Americans should be able to purchase a home affordably if they choose. Right now, a whole swath of people is being priced out of the market and many that buy in end up rent slaves due to institutional structures that favor rent-seeking rather than ownership.

Also, the US is no longer a manufacturing country. It is therefore very dependent on housing as a core industry.