On the Social Psychology of Rising Credit-Card Debt: A Reflection of American Society?

It is perhaps too easy to point to economic reasons for an increase in debt within a society. The Wall Street Journal reported during the first quarter of 2020 that credit-card debt in the U.S. “rose to a record in the final quarter of 2019 as Americans spent aggressively amid a strong economy and job market, and the proportion of people seriously behind on their payments increased.”[1] The record $930 billion, according to the Federal Reserve Bank of New York, was “well above the previous peak seen before the 2008 financial crisis.”[2] After critiquing the economic explanation, I will suggest that a social-psychological mentality or attitude may be behind not only the rising debt, but also other disappointing manifestations in the contemporaneous American society more broadly speaking.

The U.S. economy between 2001 and the third quarter of 2007 had been “weaker, overall, than its performance in the equivalent years of the 1990s.”[3] So if spending aggressively (a rather strange expression) amid a strong economy and job market in 2019 led to the record in credit-card debt, why was the debt level higher in the 2001-2007 period than during the 1990s? Furthermore, why wouldn’t a weaker economy result in more buying on credit and a jump particularly in serious credit delinquencies? In actuality, the fourth quarter of 2019 saw only moderate growth of 2.1 percent, a full percentage point below the comparable figure from the year’s first quarter. The softening of domestic consumer spending and the low unemployment rate of 3.5% should result in more credit-card debt being paid off rather than added. Going on economic factors alone takes on the look of a twisted pretzel.

I submit that a creeping pathological mentality in the some segments of American society, or perhaps outside of society, may be another, steadier trending factor. Specifically an attitude toward money and personal responsibility may have been spreading during the 2010s among the working poor. I cannot offer any empirical evidence, so my theorizing can only be considered as an initial sketch. Even so, the rough sketches of the attitude itself can be revealing with respect to personal responsibility and other people.

The attitude, which I have observed on number of occasions, includes the decision not to utilize self-discipline in the face of instant-gratification, which in turn may be felt as coming all-at-once as if overwhelming once a paycheck is received. Self-discipline may simply be dismissed as if it were an exogenous bad odor. In actuality, that odor comes from the attitude itself. The ensuing behavior is to spend too much of the paycheck without concern for money that will be needed before the next paycheck arrives (not to mention any concern to put some money aside in case of unemployment or an emergency).

In 2019, I listened more to the jobless poor who received government checks. I found that in many cases, they most or almost all of a check all at once. In many cases, they would turn to selling drugs and going to food-banks (and selling food stamps) to have money well into the month. That the mentality in spending virtually all of a check can point to an underlying mental illness suggests just how problematic the underlying mentality is. In retrospect, the consequent increase in serious delinquencies of credit-card debt can be viewed as a symptom rather than as the problem. Another “red flag” concerning the seriousness of the mentality occurred to me when I realized that the non-working poor are so very poor they are the most vulnerable financially, and a significant number, at least from my observations, displayed such flawed judgment in spending recklessly, as if they could offer no resistance to the instinct for immediate gratification. The mentality may thus be oblivious to external context and even the internal context of the mentality’s own bad judgment.

Regarding the working poor, people who display a failure of judgment concerning how much credit-card debt to add or have given the amount of the pay may also 1) have an implicit assumption that money is rightly for free (the extreme being conducive to theft), 2) believe that society owes them so they can rightly assume debt without any intent to pay it back, and 3) feel little or no responsibility to people they don’t know, including the owners of the credit-card companies and others. This extremely narcissistic attitude is entirely comfortable in violating Kant’s ethical notion of the Kingdom of Ends, by which other people are to be treated not only as a person’s means, but also as ends in themselves. Accumulating credit-card debt as if the companies’ concerns were of no significance turns the rational beings running and owning the companies into mere means to the person’s flawed decision that such money is and should be free, without obligation on the person’s part. If the counterparty is hurt, it is easily dismissible as “not my concern.” The mentality is thus not conformable to society and its implicit social contract.

I submit that the impact of the sordid mentality is evinced in not only the taking on of credit-card debt either recklessly or without any intention of repaying it, but also the increase in prison populations and drug use, and the general declining trend of civility toward strangers in public. In other words, the records in credit-card debt may be a few data points that together with other data may suggest the underlying mentality whose baleful manifestations running through American society are broader than generally thought.

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1. Yuka Hayashi, “Credit-Card Debt in U.S. Rises to Record $930 Billion,” The Wall Street Journal, February 11, 2020.

2. Ibid.

3. Aviva Aron-Dine, Richard Kogan, and Chad Stone, “How Robust Was the 2001-2007 Economic Expansion?,” Center on Budget and Policy Priorities, August 29, 2008. (accessed February 11, 2020)

Customers Give Uber a Pass: A Lapsed Enforcement of Business Ethics

A letter from a former security employee at Uber claims that the company’s Marketplace Analytics department “exists expressly for the purpose of acquiring trade secrets, codebase and competitive intelligence.”[1] The letter caused the judge to delay the trial in which Uber stood accused of stealing trade secrets involving self-driving cars from Waymo. “I can no longer trust the words of the lawyers for Uber in this case,” Judge Alsup said.[2] Ouch! The question remained whether Uber customers would punish the company by turning to Lyft instead. Unfortunately, the typical customer may overlook unethical practices at a company if a good deal is to be had. Economizing monetarily serves self-interest, whereas “walking with your wallet” oftentimes does not. Standing on principle may simply not register when people have their consumer hats on.

After its systemic customer-fraud was exposed, Wells Fargo’s management simply offered sweeter terms to entice existing customers to stay put and even to attract new ones. Although the bank had to pay in the form of offering better rates, society at large may have expected more in the form of an exodus of customers from the sordid bank for such institutions in which fraud is so systemic should arguably not continue to exist.

Even before the revealing letter was read to Uber’s judge, the company had gotten the attention of its customers by “grabbing headlines for ignoring complaints about sexual harassment at its headquarters as well for a variety of corporate practices” that had piqued the interest of regulators.[3]  Even so, Uber had reported a 10% increase in second-quarter (2017) bookings over the first quarter, according to Bloomberg.[4] Uber hit 5 billion rides in more than 70 countries during the summer of 2017. This suggests that “for a majority of consumers, disgust over corporate misconduct doesn’t always translate to ditching a reliable service.”[5]  Managements can thus buy themselves out of trouble by retaining the vast majority of customers by offering better terms.

Lest it be decried that such self-rescues should not be allowed, we have only to look at the customers who look the other way as they single-mindedly pursue their self-interest. Admittedly, they could point to government regulators as being the proper instruments for holding wayward managements accountable. Unethical conduct is not always illegal, however, and where such conduct is widespread and ingrained in a company, nothing short of bankruptcy may be just. Of the latter point, justice at the hands of a court of justice or a regulatory agency may not go far enough to exact what is just ethically.

 To be sure, Lyft was making inroads on Uber’s turf. TXN Solutions reported in 2017 that Uber’s market share had slipped to 75% from 90% in 2015.[6] Uber’s valuation may have fallen from a high of nearly $70 billion to close to $50 billion.[7] Of course, these trends could be from improvements at Lyft rather than any ethical fallout at Uber. Put another way, Lyft should arguably have been able to make more of a dent, given the sordid culture and practices at Uber’s headquarters. The sad truth may be that consumers don’t really care if a company’s management is ethical unless the consumers themselves are gouged; everyone is out for oneself without concern for principle. I submit that such a mentality—such a culture—is not in a society’s interest; the good of the whole is not merely the aggregate of individual, self-seeking choices. Even Adam Smith saw a need for government, and, moreover, of moral sentiments as enveloping a free market. Hence his text, A Theory of Moral Sentiments, should be read along with The Wealth of Nations to give the economist’s full theory.   

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[1] Becky Peterson, “Ex-Uber Staffer Says in Bombshell Letter that the Company Had a Unit Dedicated to Stealing Trade Secrets,” Business Insider, November 28, 2017.

[2] Ibid.

[3] Marco della Cava, “Underterred by Uber, Lyft Says It’s Destined to Be No. 1,” USA Today, November 29, 2019.

[4] Ibid.

[5] Ibid.

[6] Ibid.

[7] Ibid.