Something strange is happening to stigma. It appears to be under attack from capitalism.
In the good old days, getting oneself into an embarrassing predicament was potentially stigmatizing and it kept many people from making dumb choices or from acting with unacceptable degrees of short sightedness or self-interest. Sure, stigma has always had certain downsides but it has also kept many people on a straight and narrow social path and has played a valuable role in society by punishing certain behaviors that are frowned upon by society.
For example, it used to be that over-consumption and reckless financial decisions that might lead to personal bankruptcy were discouraged by the potential embarrassment of such a consequence. The stigma of personal bankruptcy was something to be avoided. Now, I hear advertisements all day long stating that "bankruptcy can happen to anyone"; I guess it's just a matter of being in the wrong place at the wrong time. The prevailing attitude seems to be "go ahead and buy that boat, if you can't make the payments, just declare bankruptcy and move on." Nothing to be embarrassed about -- there are many law firms and financial planning agencies, driven by their profit motives, ready to help you file the paperwork.
I know we have endured quite a rough economic period and that some people have been caught short-handed despite their adherence to a fairly conservative financial strategy. Nonetheless, I worry about how much worse it could get if declaring bankruptcy really becomes something with no personal responsibility nor shame attached.
A modest proposal for a return to earlier, wiser days. "Stigma" is from the Greek for tattoo mark. Originally a mark was burned into the skin of criminals to help the rest of us identify them. Of course, the downside would be that since tatoos are now hip, the 'stigma' mark would be lost in a sea of ink. But, maybe there would be an alternative.
ReplyDeleteAmen. Adherence to cultural norms and mores used to serve as a deterrent for descent into shame or 'stigma'. Now, anything goes. People default on loans without a second thought. It's the 'world owes me' attitude. That's the real shame. Reitrof
ReplyDeleteAre you saying I shouldn't have purchased that boat?
ReplyDeletenot saying anything about anyone's boat here...in fact, I'm not saying anything about anyone who has ever or will ever file for bankruptcy. I am commenting on the capitalists who see stigma as a barrier between themselves and the "customers" who they want to help file for bankruptcy. Their solution is to remove the stigma barrier by making bankruptcy seem routine which should open the floodgates of new customers.
ReplyDeleteAs a free-market libertarian, I certainly do not believe that the government owes anything to anybody. In fact, a "government" owns nothing that it hasn't first confiscated from private citizens exempting maybe the land it owns from whence it stole from the Indians). But back to the point of people defaulting on loans or bankruptcy. The banks, lenders, and other credit grantors are as much a part of this as anyone. It's business to them so why should it not be business to the individual. Provided the borrower told the truth, and the lender gave out a no documentation (maybe subprime) loan based on the criteria present at the time, it was a legitimate transaction and whatever collateral was required was given. Now that values have dropped (homes, boats, whatever) and borrowers are walking away, somehow it is now a "moral" issue. I don't buy it...
ReplyDeleteThe banks have no problem cutting lines of credit on businesses because the bank has liquidity issues - they do not care what happens to the borrowers. AMEX cut my open credit amount in half, why, because they needed to reduce their open credit exposure.
I was a mortgage loan buyer for IndyMac and we gave out money like a drunken sailor, we then packaged the loans and sold them thru Wall Street. PROFITS were rolling in. Now Borrowers need help and there is no body to help them, call 1-800-so-sorry. If my house is now worth $500k and the loan value $600k and I walk away, that is a moral issue ? No, it is business, and the bank has rights to come after me and seek return of their money. Should they do that - morally ?
I concur completely with Ryer on the portion of the argument he addressed. Borrowing money is a business transaction and neither party (borrower nor lender) carries a greater moral obligation than the other. Great point.
ReplyDeleteHowever, if one borrows money for a house but then fritters away their income on cigarettes, lottery tickets, and some aftermarket treatments for their pick-up truck rather than repaying the loan, they should perhaps feel some embarrassment about the poor choices that led them to financial ruin.
The point of the posting is that systems (like a national economy) work best in the presence of trust and accountability and function relatively poorly when those values are absent. I see the current campaign to de-stigmatize bankruptcy as an effort that could undermine current levels of trust and accountability.
businesses prey on the ignorant. if people educate themselves on what they are doing, they wouldn't have to worry about falling into a bankruptcy nightmare.
ReplyDeletea business is free to say whatever true statements or opinions it wants to. it is on the burden of the consumer to process.
education is the key. news broke earlier this week that high schools will be requiring financial education as a requirement for getting your HS diploma. In my mind, that is the best news i have heard this decade.
ironically, opponents to the government making education more accessible say "it doesn't say we need to educate the people in the constitution." This is ironic because if these opponents were well-educated, they would realize the absurdity of their own view.
The USA already spends as much, or more, money per student than any other industrialized country. So I think the big government education policy is about as effective as the war on poverty, drugs, etc. How about school choice or voucher programs ? How about a little competition ? Power hungry Federal government hacks and union bosses are opposed - what a surprise.
ReplyDeleteOne more thing on the financial topic - Sears just raised the interest rate on my credit card to 25.24 % - I called and spoke to a nice, courteous young man (who was clueless) and he said I see you have been a Sears Card holder since 1979 (I was 16) and we thank you for your business but there is NOTHING i can do for you. I said gee no problem, I will pay off the $700 balance on the new freezer i just bought, and i will NEVER purchase anything from Sears again in the next 30 years. I did the same thing to Circuit City several years ago and look what happened to them...
Merry Christmas (sorry if that offends anyone)
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