The Shredding of
the Social Contract: Revisiting the Moral Positioning of Debtor-Creditor in
Light of the U.S. Student Loan Debt Crisis
By Nicholas T. Dahlheim
“If you owe the bank a hundred thousand dollars, the bank owns
you. If you owe the bank a hundred
million dollars, you own the banks.”
~American proverb
I apologize to readers for
the one week delay in completing the first of a series of posts that are as
much autobiographical as they are analytical.
Their overrunning theme is the shredding of the U.S. social contract
which promised the prospect of upward mobility.
Perhaps the most egregious violation of this implicit social contract
comes with the mounting U.S. student debt crisis. Back in 2012, a paper authored by economists
working at the NY Fed reported that the outstanding student loan debt (at $870
billion) surpassed the nation’s outstanding auto loan debt ($730 billion) and
credit card debt ($693 billion) for the first time.[1] Arguably, that 2012 paper would have gone
unnoticed, maybe eve unwritten had it not been for the autumn 2011 Occupy Wall
Street movement where frustrated indebted college students and recent college
graduates played leading roles. Millennials,
the generational cohort most burdened by student loan debt, has lived most or
all of their entire lives under a rising tide of tuition and school fees that
has—rather than lifted all boats—sunk all of them. Tuition and fees have risen over 538% since
1985, easily outpacing the CPI inflation index by over 400%.[2] The continued “recovery” of the U.S. economy
has sadly been mostly a recovery in stock prices and corporate profits,
unemployment and underemployment remain brutally persistent. Moreover, more recent 2014 news stories which
have been attempting to say that Congress and/or the Obama Administration have
somehow contributed to unemployment rates dropping below 7% nationwide have played
fast and loose with numbers. The Democratic Obama Administration uses “fuzzy”
math similar to that used by it’s predecessor.
A much more accurate statistical proxy for the on-the-ground situation
re: unemployment, incidentally which does not exempt most college graduates, is
the labor force participation rate shown in the graph below.
Chart 1
Source: Damon,
Andre. “Mounting Unemployment in
America, Hundreds of Thousands Drop out of the Workforce.” GlobalResearch.ca. (Reposted
from World Socialist Website). April 6,
2013. http://www.globalresearch.ca/mounting-unemployment-in-america-hundreds-of-thousands-drop-out-of-the-workforce/5330086/ (accessed November 15, 2014).
The trend, which has been
especially pronounced since the 2008 credit crunch and global economic
meltdown, has been unmistakable. The reality is probably worse than it looks
given how many of the 63% of Americans with a job can only find a part-time
one. There is some “recovery,” but only if you are in the top 1%. How are college graduates supposed to collectively
make enough income to pay back their surging student loan debts with such clear
secular trends in employment, not to mention continued wage stagnation, working
against them? Sadly, the mainstream
press which is completely devoted to the dominant neoliberal ideology has been
slow to connect the dots between the economic struggles of the Millennial
generation and the crushing realities of student debt. This oft-read and commented upon October 2012
piece from The Atlantic entitled “The
Cheapest Generation: Why Millennials aren’t buying cars or houses, and what
that means for the economy” is an illustrative case. The article makes only passing reference to
the student debt crisis, and instead tries to paint the brutal economic
conditions facing the Millennial generational cohort as a product of their
exhaustion with consumerist values.
As a Millennial struggling
with a crappy job market and having dealt with crushing student loan debt
myself, I find articles like this piece from The Atlantic offensive to the common sense I’ve derived from the
experience and observation of spending my late 20s in the midst of this awful
economy. Even worse, the post-2008
recession advice many Millennials, and even older professionals received, about
the value of going back to school because “education is always the way up the
socio-economic ladder towards achieving the American Dream” has been
wooly-headed at best, downright maliciously stupid at worst. With student debt trending upwards, wages and
employment trending downwards do not make for economic security for my
generation.
But for a country whose
prevailing ideologies about work, employment, debt, family, and their relationship
to the broader society are still more firmly planted in the Puritan days of the
17th century than the globalized Digital Age society of the 21st;
the student debt crisis should serve as a wakeup call. I cannot tell you how many times I have run
into uninformed and unthinking Americans, most of them conservatives, who
quickly default to a position of “it’s honorable and morally required of a
person to pay his/her debts because nobody forced you to take out the money for
school” when discussing the student debt crisis. Furthermore, most of these conservatives and
their ilk fail to mention, lest they even know, that student debt is NOT
dischargeable but in the most extreme of circumstances. This punitive moralism from the right-wing
regressives and other conventional moralists misses the mark—the historical,
and even Biblical, understanding of debt shows that BOTH debtors and creditors
have moral responsibility in the forging of the debtor-creditor
relationship.
First of all, debt in the
neoliberal economy founded in large part on the fiction uttered by that
reprobate British P.M. Thatcher that “there is no society, only individuals”
(paraphrase) actually conceals debt as a vehicle of elite social control rather
than a mutually beneficent instrument of social good. As anthropologist David Graeber argues, the
very nebulousness of debt as a concept—particularly to student debtors who
usually hold positions lower on the social ladder and have less insider
knowledge about the state of the economy—works inherently to the disadvantage
of the debtor. For,
“If history shows
anything, it is that there’s no better way to justify relations founded on
violence, to make such relations seem moral, than by reframing them in the
language of debt—above all, because it immediately makes it seem that it’s the
victim who’s doing something wrong.
Mafiosi understand. So do the
commanders of conquering armies. For
thousands of years, violent men have been able to tell their victims that those
victims owe them something. If nothing
else, they ‘owe them their lives’ (a telling phrase) [quotes and parentheses
are Graeber’s] because they haven’t been killed.”[3]
And given the
underlying Puritanical attitudes from the 17th century behind
stifling American middle class morality, it’s not always the case that student debt
relations are founded on overt violence.
Rather, they are founded on more subtle forms of coercion of a more
thaumaturgical bent practiced through the dissemination of mass media
consumerist propaganda and institutional programming in schools, churches, and
communities. In this sense, the violence
that has been promised to those individuals who have not opted to enter the
student debt game in order to receive a college diploma is the violence of
exclusion and of anomie. In other words, the oft-repeated conventional
message says, “if you don’t go to college the road to the middle class will be
closed off for you.” Given that the
American Dream of a middle class lifestyle is axiomatically at the foundation
of the post-WWII American social contract, the role of student debt invariably
plays a role in the shaping of the public morality binding BOTH creditors and
debtors.
Indeed,
official Biblical morality dating back to the Bronze Age directly stipulated
more moral responsibility for creditors than social convention has presently
with respect to the Sallie Mae, the U.S. Department of Education, the U.S.
financial industry, and universities who share that moral burden as creditors
to students attending American universities.
Like today’s over-indebted students, the Axial Age Jews of ancient times
had to rediscover the lost wisdom from Bronze Mesopotamian kings of the social
value of periodic debt cancellations after the usurious landlordism of King
Josiah.[4] In protest to the exploitative aristocracies
which emerged after the end of the Bronze Age in 1200 B.C.E., the revived
Judaism of the Pentateuch represented a populism which sought to protect rural
peoples from predatory financiers and absentee landlords. Indeed, the underlying theme uniting the
tradition of the Hebrew prophets is the overarching concern God felt for His
People. This concern was expressed in
terms of a covenantal relationship that the Hebrew Prophets reformulated in
terms of powerful apocalyptic imagery of the necessity of continued national
economic renewal through regular debt cancellations to prevent high
inequality. Yet, ironically, Biblical
scholarship has neglected the importance of regular debt cancellations in Axial
Age Near Eastern society inspiring the social revolution of the Hebrew
prophets. For,
“Indeed,
what turns out to be ironic in studying the history of Near Eastern legal
practices is that precisely those parts of the Biblical narratives that
hitherto have been most in doubt—the laws cancelling debts, freeing debt
servants and redistributing the land to its traditional users—turn out to be
the most clearly documented Bronze Age legacy…Indeed, the Babylonian
experience survives today primarily in the transmuted form that has come down
to us through the Bible.”[5]
(Emphasis is the author’s)
Indeed, a key
Biblical text from Leviticus 25:10 likely antedating the Hebrew Prophets
appears on the Liberty Bell in Philadelphia.
The verse reads, “Proclaim liberty throughout all the land, and to all
the inhabitants thereof.” But what the
Liberty Bell inscription from Leviticus leaves out is the context. What is being discussed in the longer
Leviticus passage is not political liberty to “vote” in a “democracy.” Rather, the passage speaks of the moral
necessity to free debt bondsmen when their debts become unpayable. Moreover, Leviticus, in a passage to which
undoubtedly influenced the later Hebrew Prophets, exhorts a massive debt
cancellation during the Jubilee celebrations that occurred every fiftieth year.
Recognizing
that the current U.S. student loan debt situation is patently unsustainable and
that colleges, the federal government, and lenders have not shared any risk for
overburdening unsuspecting students with debt—students who have been told of
the absolute necessity of a college degree for their entire lives—it is time to
revisit a student loan Jubilee as necessary for restoring the shredded American
social compact between society, creditors, and its student population promised
but increasingly denied the standard of living promised them.
[1] Daniel de Vise, "Student loans surpass auto, credit card debt," College, Inc. - The Washington Post,
March 6, 2012, http://www.washingtonpost.com/blogs/college-inc/post/student-loans-surpass-auto-credit-card-debt/2012/03/06/gIQARFQnuR_blog.html (accessed
November 15, 2014).
[2] Chase Peterson-Withorn, "How Today's Student Loan Debt is Failing
Future Generations," Forbes,
July 30, 2014. http://www.forbes.com/sites/chasewithorn/2014/07/30/how-todays-student-loan-debt-is-failing-future-generations/. (accessed November 15, 2014).
[3] David Graeber, Debt: The First 5,000
Years (New York, NY: Melville House Publishing, 2011). Pages 19-20.
[4] Michael Hudson, "The Lost Tradition of Biblical Debt
Cancellations," Michael Hudson,
March 2010, http://michael-hudson.com/wp-content/uploads/2010/03/HudsonLostTradition.pdf (accessed November 15, 2014).
[5] Michael Hudson, "The Lost Tradition of Biblical Debt Cancellations,"
Michael Hudson, March 2010, http://michael-hudson.com/wp-content/uploads/2010/03/HudsonLostTradition.pdf (accessed November 15, 2014).
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