Maintaning unaffordability: consumptive lending and feminism

When Americans believed in Truth, they used to say that the road to hell is paved with good intentions.  That is to say, just because a plan of action has a noble purpose doesn’t necessarily guarantee a noble outcome, kinda like the plan to save homeowners from the horrors of foreclosure.  While appearing as a noble goal upon first glance, after a deeper look at the policy is taken, whether due to miscalculation or corruption we find that the only people truly benefiting from his attempts are powerful bankers.

To clarify before making my point, having a banking system is healthy, but investment lending and consumptive lending are two completely different things.  While investment lending lends money for the purpose of potentially increasing the income of the borrower either through business or education, consumptive lending does not potentially increase the wealth of the borrower.  Borrowing money to go to school should result in a higher income for the borrower, after which he or she should be more financially secure than before.  On the other hand, consumptive lending for televisions has no effect upon the borrower’s income, while allowing him to buy something he couldn’t otherwise afford.

Because consumer credit is used to pay for unaffordable things, it’s interesting to note that consumptive lending can’t really stimulate the economy.  Not in any real sense, anyway.  What consumptive lending actually does is make sure that things which are unaffordable remain unaffordable, and ensure that you pay an even higher price due to interest.  Before rampant use of credit (and the way capitalism was intended to work), if something wasn’t priced right, the price would have to drop or the business would fail, or the home wouldn’t sell.  Nowadays, we just expect that some things are just too expensive to buy without credit.  Time Magazine even reported that in 2008, around 72% of our economy was financed through consumption, and mostly due to rising debt instead of rising incomes.

Of course, many people argue that consumptive lending allows people to buy more televisions or cars, which in turn produces more jobs.  But the truth is that people were buying cars and televisions before credit cards were ever in vogue, and we know with surety that both the car industry and the economy were healthier than they are today.  In fact, people were buying cars, and because they weren’t making monthly (interest) payments on loans for televisions and cars, they were able to spend their money on other things.  Thus the consumptive lending business, although giving the impression that it is stimulating the economy in the short-term, is actually devouring the funds which the general populace would instead be using for many other productive industries.  As such, we must understand that the banking system is important and serves to grow an economy, but the banking industry itself is not productive.  It can only facilitate long-term production and stability when it isn’t used for every-day spending financed with long-term debt.

In her landmark speech about the credit economy, Elizabeth Warren of Harvard Law School was quick to address this fact: after adjusting for inflation, Americans spend far less money today on food, clothes, and other essentials than we did during the early 1970’s (13:00 of her address).   A close look at family spending trends displays that Americans spend less on essentials today because they spend far more on child care, auto loans for their second cars, and housing prices than ever before.  In the long term, the American productive industry has been crippled because our money has gone toward propping the prices of unaffordable services and housing up, two things which were at one time affordable.  Back in his day, my grandpa was even able to buy his home outright with a few thousand dollars.

So as economist Peter Schiff would say, when our government leaders take actions to stabilize home prices, they’re not really helping the populace: people are in homes which are over-priced, which they cannot afford.  If anything, the populace needs to get out of debt slavery, a painful yet necessary process which happens when we allow ourselves to go through a recession.  Instead, what the government is really doing by keeping housing prices from dropping is ensuring that bankers can continue to get more money than homes are worth, effectively siphoning the wealth of Americans into their pockets and keeping us from spending on other things we really need, like health care.  But ending governmental support of debt wouldn’t solve the problem entirely.

As unpopular and inconvenient as the topic may be, the truth is that when Americans embraced feminism, opting to have both parents work instead of one remaining at home, we directly affected our entire economy.  Since homes are priced at the maximum amount of money the market can bear, the combination between two income earners can only serve to increase or stabilize home prices while making the banking industry even more essential for home loans. Having two income-earners cannot in any way, shape, or form make homes more affordable.

While information from Yale economist Robert Shiller shows that home prices stayed relatively close to the rate of inflation, market research shows us that the percentage of mothers in the workforce more than doubled between 1969 and 1996, while household incomes rose only marginally.  In addition to this, the US Census Bureau shows that while drastic numbers of single-income families live in poverty (the bottom two fifths being overwhelmingly comprised of single-income families), families with two incomes were maintaining an adequate standard of living.

A further look at the US Census Bureau’s information yields that those same single-income families living in the poorest two brackets are drastically less likely to own homes.  For the single-income family, home ownership–should it even become a viable option–became absolutely dependent upon the banker, and since the government popularized the 30-year loan with lower interest rates, the likelihood of homes becoming affordable for the average single-income family is unlikely at best.  So while it may appear that feminism made gains for the woman and that home prices weren’t affected too badly, the wife most likely secured her job not out of personal independence, but rather out of necessity: the families with stay-at-home moms didn’t fare nearly as well.  If mothers were to suddenly leave the workforce, many more people would enter the lower brackets (although competition for employees would likely result in wage increases).

But overpriced homes aren’t the only problems we’re facing: when we told women to abandon one of the most noble calls of duty available to the human race, we saw expenses expand along with credit card banking (11:10).  Because of our addictions to feminism and easy money, Americans are now being strangled by debt.  Today, the average American does not have a savings account (10:20).  Today, the average credit card debt is above 8,000.

So let it be known that the modern woman is not free: she has sold her soul for the sake of pride, to men who haven’t made a promise of loving commitment, but conversely have her commitment under threat of legal action or financial instability.  She now has two masters instead of one husband: the bank and the boss.  Her children have been torn from her arms and indoctrinated by the state: her boys taught to act like women, her girls taught to open their legs for men.  If this is the result of feminism, then feminism is a lie and must go.  But before feminism can go, housing prices must fall.  Without allowing for a significant drop in housing values, the government is practically forcing women to work to support their families.

And this brings us to a fundamental point about economic morality: the Bible tells us that debts within the covenant community are to be released every seven years, and it also tells us that a woman’s duty is to her family, not primarily to her boss.   We are not to take advantage of the poor by charging them exorbitant lending rates: we must abandon credit cards and oppressive payday loan centers.   We must regain a healthy understanding of the banking industry and family morality at any cost, for the cost of our own imprudence will be far heavier in comparison.

Of course, these changes aren’t exactly minor, and proposing them is going to ensure a lot of loud opposition.  The most obvious opposition to these policies will be from those claiming it will wreck the economy, and they’re right: these policies will severely reduce the amount of debt in America, along with the cost of living.  And of course, there will be a long period of readjustment to an honest and reputable economy.  But as C.S. Lewis would say, there comes a time when the progress you’ve made–in this case through the credit economy and feminism–isn’t really progress, and it becomes progressive to look back to wiser and more successful times.  Eighty years ago we had a functioning economy without total reliance on the 30 year loan or the credit card, and people still lived in houses.  Fifty years ago, women took care of their children, and we could leave our keys in our cars, and let our children bicycle around the city.  These revolutions changed America for the worse, and we need to reverse them.

There will also be many who will argue that if you leverage your funds because of  30-year mortgage, you will do better than someone with a 15-year mortgage because you can invest your funds into the market instead of paying a higher monthly premium for your home.  Unfortunately, this kind of thinking involves a lot of risk (nobody seems to remember that 401ks can disappear in a day) and completely disregards the fact that the average Joe shouldn’t have to be a wizard in order to be able to live.  In the long run, even if we have the most rich country in the world, if it got that way because the little guy was enslaved or forced into gambling, it’s not worth it and it deserves to implode.  And for those who would argue that payday centers and credit cards help people in financial trouble, I would argue that yes–it may become more difficult to score funds in a pinch, but there will be far less people in debt and poverty.

As such, there are going to be upsides and downsides with any system you choose, and the better systems have downsides we can live with.  As such, safe lending and traditional families–like capitalism and democracy–aren’t perfect.  You can’t solve all the problems all of the time, and not everyone is going to like the system.  But what you can do is make things as good as they can get, and if God’s word is an indication of anything (He is God, after all), then maybe we should choose to deal more closely with the set of downsides He Himself prefers.  It worked for us before, and it will work again.

So what do we do?

-Make credit cards and payday loan centers illegal

-Make all home loans restricted to ten-year plans, or less

-Make all car loans subject to five-year terms, or less

-Stop government bailouts of the lending industry

-Women must choose the noble path and raise their children, but they need our help.  Encourage and exalt noble women, giving them honor, and ensure they lead the younger women.  Stop abusive men from looking down upon women’s work, and don’t allow others to speak negatively about housewives.

This entry was posted on 26. February 2010 at 15:29 and is filed under politics, economy. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response or trackback from your own site.

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