I blame it on the fact that in the West we have no rite of passage from childhood to adulthood. It used to be setting up an independent household in digs in your early 20s, but that’s not as common as it used to be for a whole bunch of reasons. Doing that tended to enforce thrift, and the electricity/gas meters of the day were quaint old things that took real 50p pieces so credit wasn’t an option, it was cash or no power.
However, the cathedrals of consumerism instigated by Edward Bernays have pushed the desirability of iFads and associated ephemeral tat so hard that the relationship between a lot of people and their Stuff is akin to that between and addict and his poison of choice. According to this study it seems that
[…] the more credit card and college loan debt held by young adults aged 18 to 27, the higher their self-esteem and the more they felt like they were in control of their lives. The effect was strongest among those in the lowest economic class.
Well, colour me a grizzled old fossil, but something has gone very badly wrong here. It doesn’t apply to all young adults in my observation, so either it’s really tough out there in the United States, but yes, I can see where these sociologists are coming from. And it ain’t gonna get better, because these young folk get to find out later on
“By age 28, they may be realizing that they overestimated how much money they were going to earn in their jobs. When they took out the loans, they may have thought they would pay off their debts easily, and it is turning out that it is not as easy as they had hoped,”
Yup. That’s the kicker with debt, you get to find out it’s not half as easy to pay back as it was to take out, welcome to the magic of compound interest, this time working against you. Particularly if you’ve left the debt to fester for a few years and particularly in an environment when middle class jobs are hollowing out. Bankruptcy and IVAs are the only way some of these guys are going to be able to sock it to The Man. At least in America, where that study was done, you can walk away from a mortgage in negative equity… In a final statement of the bleedin’ obvious
“We found that the positive effects may wear off over time, but they still have to pay the bills. The question is whether they will be able to. There needs to be additional research to answer this question.”
Don’tcha love sociology. I can save you the trouble of that additional research, Rachel. Most of them won’t be able to. How do I know that? I did my own research, it didn’t cost me anything and it was done in an afternoon. Allow me to introduce me to The Money Shop, a common sight in Britain’s High Streets. In the States you have Mister Money doing the same job.
Both of these are symptoms that the falcon can no longer hear the falconer, and the centre is losing its grip… The strapline of the research title gives it away – What, Me Worry? Young Adults get Self-Esteem Boost from Debt. They’re hardly going to dump something that boosts their self-esteem, are they? However, let’s not just blame the young’uns here. They at least have the excuse that they are new to the game. If you’re over 30 and carrying on like these young adults, then what’s your excuse for believing it’ll be all right on the night?
Simple Living In Somerset 
I think the situation is bleaker, as I am still relatively young and grew up in the boom times of the 1990s when this all started. I’m no right winger but what we are seeing here isn’t merely stupidity and arrogance, its moral decline.
course its not so much the “debt” the young people get self esteem from – its from the material gadgets and lifestyles that it temporarily pays for.
A lot of people often take on this debt with little or even no intention of paying it off – because they think either their parents will do so, or they can (and often will) simply do a runner.
Especially in shared houses which is why its hard to get credit ratings for those living in such arrangements. This was rife in the 1990s before the facebook/google culture made it much easier for private investigators to chase down people.
Middle class kids usually know that *overt and brazen theft* results in arrest, Court and maybe even imprisonment. They also know there are some creditors you *don’t* play games with, such as drug dealers. (That said, some smarter if unethical youths actually pay off their “legit” debts by the use of black market transactions, i.e money laundering!)
However to those who lack maths skills, full knowledge of how the system works and perhaps whose judgement has been clouded by hedonistic lifestyle choices, they feel that financial institutions are simply “a bunch of nerds they can rip off as they are stupid enough to hand out the cash in the first place”.
And the class of youths *below* them simply takes the gadgets either by force and/or in payment for drugs debts etc. If you look at the local news or read the crime prevention sources you will notice our local Constabulary is dealing with a large rise in the amount of street robberies in many areas of Suffolk…
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Hi ermine
I really think that some basic financial studies should be included in the education system somewhere. Of course it would be depressing for the students once they finally figured out the “game” but at least they would know rather than the ostrich syndrome we have today.
It would not only help them in their personal lives but also prepare them for their work lives by giving some very basic skills that any “white collar” worker should have.
I’m not talking complex stuff but simple things like:
– compound interest but with £ signs in the questions.
– £X mortgage for Y years at Z% means this much goes to the lender.
– a fund with X+1% fees over 20 years gives you this much less in retirement than a fund with X% in fees.
– etc
Cheers
RIT
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@ermine,
This is no rant. You have spoken the truth, guv!
Here’s a well written article on the points you make about rites of passage and true maturity 🙂
http://blogs.the-american-interest.com/wrm/2011/06/03/the-death-of-the-american-dream-ii/
Good reflections. Now, if only we could get this post as compulsory reading to those infantiles before they trot off to the pub!
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