Write Team: Rethinking our perception of debt

Be frugal. Avoid debt.

This is Michelle Singletary’s advice in a nutshell. She writes “The Color of Money,” a personal finance column geared towards African-Americans in the Washington Post, and has for 25 years. She cites her grandmother, Big Mama, as her most enduring influence.

Jared Bernstein, a member of the White House Council of Economic Advisers, praises Singletary as “a walking, talking, vigilant consumer protection bureau.” And I got hung up on that line.

There’s nothing wrong with preaching the virtue of prudence. Being prudent about one’s financial decisions is well and good. We all ought to strive to follow the advice of Singletary and her grandmother. But — you knew there was going to be a but, didn’t you? — I cannot escape the feeling part of the advice here is people who make financial mistakes are simply to be abandoned.

Last year, according to a report from the Federal Trade Commission, 95,000 Americans reported losing $770 million to scams propagated through social media.Investment scams, particularly bogus cryptocurrency investments, made up more than a third of the reports.

Cryptocurrencies, such as Bitcoin and Ethereum, and their related exchanges are largely unregulated. Leading proponents claim cryptocurrency is the future of finance. Often these same proponents are committed libertarians, deeply resistant to even the idea of government regulation. Indeed, the entire purpose of cryptocurrencies, first described by a shadowy character known as Satoshi Nakamoto, was to create an alternative financial system independent of government.

Obviously, you should avoid scams. But if tens of thousands of Americans are losing millions of dollars to online crooks, shouldn’t we do something about it? My sense is personal finance is only able to say “be careful.” If someone loses their place in society after falling prey to a financial scam, just be glad it wasn’t you.

When I was living out in San Francisco, I encountered folks experiencing homelessness pretty much any time I left my apartment. After a few months I became careful not to make eye contact with people on the street, for fear they would ask me for money. Later, reflecting on this experience, it occurred to me what I was doing was trying to avoid acknowledging others’ humanity. And that thought made me wonder: do we treat poor folks as perhaps a bit less than human?

I am afraid of poverty because I am afraid of being treated as less than human. When I think about personal finance and responsibility, I think about how I can absolve myself of ignoring poor folks. Of not recognizing our common humanity. If they had made good decisions, they wouldn’t be poor. Good, virtuous people make wise financial decisions. Individuals mired in debt are, therefore, not good. They’re bad. Bad people. To be avoided.

Medical debt is the leading cause of bankruptcy in the U.S. Student debt incurred by college students is more than $1.6 trillion. What is one supposed to do? Not get sick? Not pursue higher education?

If one could improve society simply by telling people to be prudent, then why do predatory lenders and financial scams flourish? It seems to me the point of focusing on personal responsibility is to ignore social and political problems. I wonder what Big Mama would say.

  • Samuel Barbour is proud papa, loving life partner, and amateur ukelele composer, local economics professor Samuel Barbour muses on all things topical, within our community and abroad, affecting our daily lives. Questions and comments are fielded at newsroom@mywebtimes.com