Debt trolls

In the tenebrous Piranesian dungeon of US politics and culture, things which might seem rather ordinary, even obvious, anywhere else, gleam with a dangerously radical luminosity. Consider, for example, the topic of student loan forgiveness.

The staggering burden of student debt – about $1.8 trillion dollars these days – is clearly a social creation. It was encouraged by government policy, and pushed hard by banks at severe moral hazard and universities who got the cash up front, and by relentless propaganda about the benefit, or rather necessity, of a degree, or two, or three. And indeed employers often do have completely arbitrary requirements for these expensive bits of paper, so the prospective student finds himself offered credit without collateral, so he can buy his ticket, and threatened with disaster if he doesn’t take it.

Hence it doesn’t seem unreasonable that the government and the lenders who caused this problem might bear some burden of responsibility for fixing it, even on the plane of analysis in which debt has a moral significance, a questionable proposition to which we shall return.

But the suggestion illuminates some of the darker corners of the American psyche. Those wretched kids should have known better! Why should the taxpayer have to bail them out? And if debt weren’t sacred and inviolate, my God, what would become of us all? And you hear this not just from the usual abominables, like niggardly flint-hearted Joe Biden, the banksters’ old family retainer, but also from enlightened, usually generous people, from whom this sort of Ebenezer Scrooge toad-venom sounds very odd indeed.

Of course as a matter of logic none of this makes any sense. The kids took the money because they were frightened or scammed into it, and the only real beneficiary is the diploma printer that got all the money. And the taxpayers are accustomed to paying to solve social problems – that’s what taxes are for; if the government pays to repair a dam it has built, the people who live downstream benefit, but the people upstream also pay. And, of course, the student is also a taxpayer, and will be for the rest of his life. And of course debt has never been sacred and inviolate, in practice – there’s always been a thing called bankruptcy, though in a curious twist, this recourse is difficult or impossible in the case of student debt, which unaccountably has a privileged status among debts.

Sense, however, flies out the window in the face of the sacred, and the sacredness of debt, its moral significance, is what we’re up against. That, and the bizarre streak of punitiveness and vindictiveness that runs like arterial blood through American culture; but the latter is an unpleasant object of contemplation and one which in any case I find utterly inexplicable.

The sacredness of debt, however, is eminently explicable: it is clearly a direct ideological emanation of the rule of Capital. What is interesting and depressing is how deeply internalized it is, and how it can coexist, like a lurking troll under the soul-bridge, with good sense and a good heart.

And that is why demanding student loan forgiveness, in the abjectly depoliticized and pathetically backward US, where nothing else that’s any good is even being talked about, much, is so surprisingly radical, and upsets people so greatly. It’s a stone hurled down at the troll, and it makes the troll fighting mad.

Debt, of course, is an ancient institution, long antedating capitalism, and it certainly has its uses, not all of them malign. But it’s no more sacred than the power grid. It’s an instrumentality, a machine for oiling the wheels of commerce, and as such, subject to adjustment. Lenders don’t need absolute inviolability and in practice have never had it; what they need is a reasonable overall likelihood of repayment, and of course, like all businessmen, in each individual case they try to assess risk and weigh possible return against it. Every so often they will guess wrong, of course, and then they will take a haircut. Indeed they ought to take a haircut every so often, just to keep them from getting above themselves.

But of course this view of debt is abhorrent to Capital, precisely because it makes clear that debt is not some autonomous, irresistible law of nature, but a thing socially created for certain specific purposes and subject to social control. Now concepts like “socially created” and “subject to social control” are to Capital what garlic is to a vampire.

So although debt forgiveness wouldn’t destroy that mythical beast, “the economy”, and wouldn’t even cost “the taxpayers” much – most of the debt is directly held by the federal government, and could simply be written off the books without cutting anybody a check – it would tend to unveil the mundane reality of the institution beneath its gaudy hieratic vestments, and hence can’t be entertained.

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