Why Aren’t We Talking About America’s Biggest Epidemic?
Shedding light on our debt problem
The Federal Reserve released their latest report on US household debt this week, but the odds are you didn’t hear about it.
Of all the epidemics afflicting Americans today — opioids, meth, gun violence, obesity — one seems to generate disproportionately little discussion: DEBT.
Americans today are more indebted than ever before.
US household debt is now $12.96 Trillion — that’s an all-time high and $280 Billion higher than it was in 2008.
Having trouble imagining $12.96 Trillion? Think about it this way: it’s the equivalent of every single American man, woman, and child owing more than $40,000!
Although not all debt is bad — using a mortgage to buy a home can be a good long term decision for example — it’s worth noting that the Federal Reserve also estimates that 15% of Americans have negative net worth (meaning they have more debts than assets).
That works out to about 50 million people who are drowning in debt — that’s the equivalent of the combined populations of America’s largest 50 cities!
And while the financial statistics are staggering, they fail to convey the human and social cost of debt.
Behind each statistic, there are millions of people suffering from the anxiety, shame, and loneliness that come with debt.
This financial stress is often associated with deteriorating mental and physical health, marital distress and divorce, drug and alcohol abuse, suicide, obesity, and gun violence.
Debt can also erode freedom of speech and civic engagement. People living paycheck-to-paycheck are less likely to skip a day of work to vote or attend a protest. Even people who are earning high incomes but carrying large amounts of debt may engage in self-censorship for fear of hurting their careers or losing their jobs.
This disenfranchisement breeds social and political instability and has contributed to the rise of the tea party and occupy movements and the election of Donald Trump.
So why aren’t we calling it an epidemic — or even talking about it?
Despite its prevalence, and the high costs that debt extracts from society, we are still conditioned to associate wealth with personal success and failure with debt and poverty.
Even with more than half of all Americans carrying some form of debt and many books detailing the systemic causes behind the rise of debt, poverty, and economic inequality, there is still a lingering perception that debt is an indicator of personal failure — so the victims often still get the blame.
This conditioning reinforces the taboo most of us have against talking about money with other people and pushes the topic of debt out of our day-to-day interactions, conversations, and consciousness.
We need to reframe Debt as a social issue.
The first step towards a solution must be to acknowledge that debt, poverty, and inequality are primarily societal failures which are affecting all of us. So we all have an interest in creating broader awareness about them.
Bernie Sanders made inequality a central issue in his presidential campaign and proposed policies to address some of the primary reasons people accumulate debt. These included making public colleges tuition free, guaranteeing healthcare for all, and raising the minimum wage to $15 per hour.
Elon Musk and Mark Zuckerberg have backed the idea of a universal basic income (UBI) which would guarantee a minimum livelihood for everyone and serve as the ultimate social safety net.
Politicians and public figures certainly have a large role to play in raising awareness and proposing solutions, but real change will also require each of us to break the taboo and speak out about debt.
Kick-starting this conversation was one of the reasons I founded Status Money — but that’s a topic for another post…
For more about debt and inequality, I recommend the documentary “Inequality for All” and Joseph Stiglitz’s book “The Price of Inequality”.
