GM And The Culture Of Debt

Here is an interesting story from NPR’s marketplace that discusses the relationship between General Motors (GM) and America’s culture of debt, which puts forth the idea that GM created the culture of debt as a way to spur demand for its cars. It’s an interesting story, apparently at one point Henry Ford was against the idea of Americans using debt to buy cars.

Fast forward nearly 100 years and people are talking about the “democratization of credit”, as if people with poor finances and bad credit are being oppressed because they don’t have credit cards and mortgages they can’t afford.  When Detroit starting phasing out its leasing business last year, it was often portrayed as some sort of “loss” for the consumer as they couldn’t use leases to spend up.

Debt has moved from being merely a tool to afford things, to being some sort of “right” that people must have in order to afford a lifestyle that exceeds their financial grasp. Fixing America’s debt addiction is going to require that we also fix the sense of entitlement we have around it.

Disclosure: at the time of publishing the author didn’t own a position in any of the companies mentioned in this article; the ideas expressed are solely the opinions of the author and shouldn’t be viewed as financial or investment advice.

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