Tuesday, October 16, 2018

Debt: Voluntary Slavery

As a long time reader of Liberty's Torch, and before that, Eternity Road, I had to think carefully on my first post here. I am convinced, despite our curmudgeon's probable protestations to the contrary, that Francis is one of the most important minds of our time.

The reasons for this are many and varied, but if I were to attempt to grasp the essence of the thing, it would be this: Francis has a rare ability to get to the root of the truth, and power through all the unpleasant roadblocks that are often in the way. In my experience, most people I've met have difficulty wrangling with an unpleasant truth. Remember when Donald Trump referred to Haiti as a shithole? Liberals, and many nominal conservatives with them, decried Trump's language as a grave and wrongful insult.

True, it was impolite. And true, it was insulting. Was he wrong, though?

Liberal protestations filled the airwaves about how Haiti's people were good and righteous, and Haiti was such a wonderful country, with rich history and culture. One reporter even exclaimed that his trip to Haiti had been wonderful and posted pictures of himself swimming in a tropical paradise.

Francis, I'm sure, could have told them they were all fools for trying to bury the truth behind pleasantries and polite fiction. Certainly I thought as much upon reading the gushing love stories for Haiti. Ah, but where did I learn this ability?

In part, from Francis himself.

It's a story I've told on my own blog more than once, but many moons ago I happened upon a screed where Francis warned against assuming debt. Any debt. Even mortgage debt, which went against all conventional wisdom then (and much of it now, even). At the time, I disagreed with him rather vehemently. Of course, in those days, before the big bubble burst, real estate was the sure thing. Get a mortgage, make a profit just by sitting around doing nothing. Better get it before you're priced out forever! It's so idiotic in hindsight, but at the time nearly everyone believed it. Collective insanity is a strange thing.

Francis wasn't fooled. I was. The idea that one should steer clear of debt for things we all desire strongly was exceedingly unpleasant. The mind - mine, at least - recoiled from it.

I'm a believer, now. If you have debt, rid yourself of it as quickly as is practical. Oh, I still hold a mortgage - I don't like it, and I conspire to rid myself of it. But I have no other debt, and even this debt I have 40% equity in, and pay extra toward. Four or five more years and it will be gone, too. Then I will never have debt again. I've come around to viewing debt as a fundamentally bad thing, perhaps a necessary evil in a Scylla-and-Charybdis situation (though most often, not even that much), but no more than that.

The thing about debt is that it puts boundaries on your decisions that wouldn't otherwise exist. It forces some of the very polite fiction people spout on the news and on social media. Consider the many examples of people fired from their jobs because of a tasteless joke on Twitter, or a bit of political incorrectness on Facebook. Consider businesses boycotted because somebody figured out one of the owners wasn't in the gay marriage fan club. If you have no debt, and decent savings, these things are relatively minor problems. You won't lose your house, your car, your furnishings, possessions, and property. 

If you have debt, the fear of being blacklisted, of being a viral social media scapegoat, is palpable. Indeed, it can be utterly terrifying. So, rather than speak truth, there is a social pressure to speak polite lies. Haiti, of course, is a wonderful and beautiful country. And if its people have problems, those problems are clearly the fault of privileged white Americans. Am I right? Of course I'm right, because it sounds nicer than saying the place is a shithole. All lies, of course. But speak otherwise publicly and risk getting fired.

The connection between debt and polite Leftism is quite real and, amusingly, is one of the reasons the Left did not see Donald Trump's 2016 victory coming. The voting booth, at least, still remains anonymous. How many people spout Leftist platitudes in public, but don't believe in them in the slightest?

Debt stifles freedom of speech and freedom of action. In a sense, it becomes a sort of voluntary slavery. Which isn't as bad for some as it first seems, because fact of the matter is, some people prefer slavery to freedom. Nineteen Eighty Four has this concept covered quite well. Freedom is slavery, the Party says. Thus slavery is also freedom. Slavery supplies freedom from certain responsibilities like taking political and moral positions. These are chosen for you. You don't have to worry about them. Slavery also provides you with basic provisions. Food. Shelter. They may not be very good or, in the case of many American debt-peons, they can be as palatial as a king's mansion. But they are provided for you if you want them.

Do not worry. If you do as you are told, think as you are told, and obey your masters in all things, you will be taken care of, in accordance with their will and their estimation of your value.

This wouldn't be as bad as it sounds if people were aware of it. I have one last mortgage to extinguish. When I do, I will have bought my freedom. Roman slaves did this all the time. They would save up their money, and buy their own freedom. The average American who walks into a car dealership and signs up for a $36k note (roundabout the average new car purchase cost) doesn't realize that he's signing away some portion of his freedom.

People will protest that it's better to get the low interest rate, then invest funds elsewhere for a higher rate of return. Fine, fine. If you have the money and you want to do something like that, by all means. If your freedom of speech, action, and thought is not impaired, by all means, do as seems best to you. But in my experience, most people who say this don't have the money, and invest nothing anyway. So it's a meaningless excuse.

This was a hard lesson for me. I've never been a spendthrift, but even I had succumbed to a very wrong way of thinking about things. And it is in part due to Francis that I rid myself of it. It's an unpleasant truth, delivered from a curmudgeonly Yankee. Debt is like the financial equivalent of Haiti. It's a dump, but we all pretend it's just fine because it feels better that way.

But the truth doesn't care about whether or not it is pleasing to our sensibilities. It either is, or is not. That is a lesson many Americans need to brush up on, and that's why this blog, and others like it, are so important.


Linda Fox said...

There are just a few arguments in favor of getting a mortgage:
- the tax system favors it so strongly - for many people, the deduction on your personal income can amount to several months payments on the mortgage
- it some areas (perhaps most), it's cheaper than renting an apartment or house
- it acts like an enforced form of savings. Assuming that you buy a home that is priced affordably, you can build up equity, and cash in later - if you're over 55, there are tax advantages available to offset the profits.

Against it:
- it ties you to a particular location - very bad for those needing to move for a job.
- it's a depreciating asset - if you're lucky, you'll make money in the short run - but, that's not guaranteed.
- many people - perhaps MOST people - over-house themselves. They buy a house that they really can't afford, and leave themselves no money for savings, investments, or even staying out of consumer debt.

We have 11 years left on our mortgage, which is a ridiculously low rate of interest. If we ever sell, I'm inclined to put the money into income property or other investments, and just rent.

CGHill said...

At the halfway point of mine. It is, however, my last bit of debt: everything else goes on plastic, but the plastic is paid off within 30 days.