I’ve been on a reading tear lately. In one book, The Scandal of the Season, there were two times that the author lingered upon the concept of credit, both quite negative.
Set in 1711, the book leads you to understand that credit is still a new concept in English society. That alone is a hard concept for me to wrap my head around.
In one scene, a servant profits off his employer’s credit account. Sent to the store with money and a list, the servant puts the items on the rich man’s account and pockets the money for himself. He then marvels as the ease and usefulness of the new trend.
But a much sharper critique comes later in the book. When they read that a group was arrested and charged with treason, some of the characters fall to their characteristic repartee. One man observes that, if the accused had wanted to be hanged, there were far easier ways to accomplish it — theft, for example.
“…These days every nobleman and politician makes his living by stealing. It is called ‘going into debt’ and it is considered the mark of good breeding.”
It’s strange to consider debt the equivalent of theft. At least, it’s strange in this society, where we are used to credit being extended to us every time we turn around. (Want to buy a car? Get a loan. Want to buy furniture? Finance it. Want to save money on clothes? Get a store credit card.)
But, if you borrow money and cannot pay it back, isn’t that a little like stealing? No matter how good your intentions were, the fact is that you took money and did not replace it.
On the other hand, you didn’t pick someone’s pocket. You sat down and agreed to terms with a lender — legitimate or otherwise. So can it really be called theft if both parties were in agreement?
Still, debt as theft is an intriguing idea. At the very least, it’s nice to hear someone take credit so seriously — especially considering how much indifferent spending goes on in the rest of the book.
The noblemen mentioned apparently go into debt simply because it is what everyone does. That’s not too far from the middle class attitude that got us into the credit crisis.
With the job loss, housing prices and other problems, plenty of people who used credit ended up in bankruptcy or, at the very least, defaulting on some of their bills. Some ended up there from bad planning; others were victims of circumstance. Most people were a mix.
Regardless of how they got to that desperate point, the people took money and didn’t give it back. So is it stealing? Ostensibly, they had every intention of paying the credit off. Can it be theft if the person planned to pay back the creditors?
What about the people who borrowed so much they couldn’t ever pay everything off? Plenty of folks seemed to be living on credit: filling in gaps, making minimum payments and using every cent of their credit line to keep going. Whatever the people’s intentions, if they were borrowing money they couldn’t pay back, isn’t that stealing?
No related posts.
Related posts brought to you by Yet Another Related Posts Plugin.
{ 7 comments… read them below or add one }
Hmm…that's a good question. But really, can you consider it stealing when the "victim" goes out of their way to entice you to take their money??
For myself, four or five years ago, It took a lot of strength to withstand the onslaught of at least 5-10 new credit card offers a week, along with constant increases in the credit line of my existing card. I know I might be looking at tens of thousands of dollars in debt right now if I had taken advantage of even a quarter of what was offered to me unsolicited. Unsolicited. (I want to emphasize that). Luckily (?) I had already experienced a minor credit card fiasco in the past and had no desire whatsoever to go through that again. Which resulted in 100% of those offers going into the shredder. But without the knowledge gained from my previous experience, I might have done what many, many people did. Take the money the credit card companies were so eager to give and run with it. With every intention of paying it back. Until – oops! – what happened? Can't possibly pay all this back.
[Reply]
If you go into debt with no intention to pay it back? Absolutely! Because you agree to pay it back.
If you go into debt and could pay it back but don't because you spend the money on other things. Yep.
If you go into debt and really can't pay it back but planned to, not as much. It's not a good situation and one to be avoided if ever possible, but it's sort of like when you borrow your friend's car and accidentally wreck it. It's not morally wrong because it was an accident, so long as you weren't particularly careless or did it intentionally.
@Deedee Re: "entice", the same could be said about any company selling things. I've gotten "unsolicited" ads from Best Buy for stuff I couldn't afford but which they make look very appealing. Does Best Buy entice people to steal electronics? No. They expect to be paid. So do credit card companies. I've yet to receive a credit card offer that said, "Here, take our money and don't ever pay us back!"
[Reply]
Is charging interest, finance charges, late fees, annual fees etc the same as stealing?
No. Engaging in a business transaction where both parties acted in good faith is not the same as stealing. The creditor accepted the risk in return for the massive rewards they get on the majority of the transactions they enter into.
[Reply]
DeeDee: They're not enticing you to take their money. They're enticing you to overextend yourself.
When you sign up for the card you are entering into what Courtney says, "a business transaction." If you agree to repay the credit — and you are agreeing to do that when you sign on the line — when in fact you have no intention of paying it back, yep, it's stealing.
Put another way: If you took a new job and didn't get a paycheck after two weeks, I doubt you would you want to hear your boss say, "Oh, sorry, can't pay you. I actually knew that when I hired you but I wanted to get some work from you so I just, um, lied about paying you. Have a nice day!"
[Reply]
OK, ok, upon reflection I totally agree with all your responses. If a person agrees to repay the credit when they have no intention of doing so, then without a doubt that is stealing. (I never disagreed with that).
But I think where I was coming from was that many, many people signed up for those easy credit cards with every intention of repaying what they used. And then circumstances caused them to default on the agreement they made. They were just not savvy consumers, not being responsible, or maybe it was wishful thinking? But, after rethinking this, I would consider that stealing too. Even though they meant to pay it back. They should have taken responsibility at the time the credit was offered to them to realize that they should decline the offer. (That's what I did – yay for me!) Even though I do still kind of have a bad feeling for the financial institution's actions, I do see that ultimately it is the consumer's responsibility to handle their financial affairs responsibly. If they made a bad financial decision it is not the fault of the financial institution that facilitated that decision. So, yes, to enter into an agreement to pay back credit received and then not pay it back…I consider that stealing whether it was intentional or not.
[Reply]
No. The lender is profiting by charging borrower's interest. By and large lenders have recourse to the collateral for a loan. If you default on a mortgage or a car loan, for example, the lender gets not only the loan repayments and interest you've paid up to the moment of default but also the thing you've borrowed the money to buy.
In the case of credit card loans, the lender not only collects interest from most borrowers (i.e., those who carry a balance), it also collects from merchants who accept the credit cards. These merchants raise prices on all goods and services to cover those transaction fees, meaning that every single one of us underwrites credit-card lending, whether or not we use credit cards ourselves. Thus you could argue that it's the lender who's making out like a thief.
Dunno what the situation was in the 1700s, but in the 1500s and 1600s, lending was considered akin to theft. Charging interest — any interest — was regarded as usury, and Christians were not supposed to do it. Although a good Christian could lend someone money, he or she was not allowed to collect interest. That is why, in Europe, lending was relegated to Jews, who had no such religious stricture. It's reflected in the character of Shylock, and Shakespeare's depiction of Shylock, which is much more mellow than contemporary characterizations such as Marlowe's Jew of Malta, is so vicious; Shakespeare is simply mirroring the attitude of his culture toward lending and lenders. Lending was considered immoral; in the absence of tolerance for religious and cultural differences, Jews were by extension considered immoral and even Satanic.
[Reply]
The interest rate is compensation for risk (in addition to compensating for the cost of not putting money in a safe asset, like the 2 percent gov't bonds back in the olden days). The higher the risk of nonpayment, the higher the interest rate.
[Reply]