Life is full of unintended consequences, often as reactions to technological advances or well intended legislation. One glaring example is in the Civil rights arena. That much needed social movement brought with it an explosion in the homeless population because many people suffering from addiction or mental illness suddenly had the right to choose or refuse treatment. To be sure there were the “snake pits” where unfortunate souls were warehoused and mistreated but in this case the baby was definitely discarded with the bath water.
I am beginning to see another unintended consequence starting to manifest itself. The first indication for me, that initial trickling of water down the inside wall of the dike, came in the form of an article in a recent edition of the Houston Chronicle. The column I reference is a regular feature, written by a local practicing attorney who answers readers questions concerning legal matters.
The normal fare is about such things as the neighbor’s barking dog or who is responsible to trim the tree that is encroaching from next door. However this entry concerned a reader who had a practical, as well as moral, dilemma concerning debt.
The person asking the question described himself as a senior citizen subsisting on a small fixed income and due to the rising cost of living barely able to service his outstanding unsecured debts. He wanted to know what would happen to him if he simply stopped making payments and used the funds to enhance his living standards instead.
While not offering advice, the attorney pointed out that “unsecured” meant just that and that the greatest downside consequence would be harassing calls and letters. He also mentioned that he had fielded that question many times in the past few years.
In my mind this is an unintended consequence of the digital age. Banks and other lending institutions, in fact most corporations without regard to the business they are in, have converted us all to being merely ones and zeroes and have walled themselves off any vestige of human interaction.
There was a time when a loan officer was a flesh and blood person, someone you sat across the desk from and interacted with on a personal basis. He or she would get to know you and would be the final arbiter in deciding whether or not you would get a loan. This person’s job security depended on an ability to make good judgments and as a client you didn’t want to disappoint the person who trusted you with their institution’s money.
Today’s “loan officer” is likely to be a clerk who only enters data into a computer. The computer then queries other computers to discover your history and sets up a series of pass/fail gateways. It is the machine that then determines your credit worthiness. As consumers we have little to base moral or ethical conduct on. The machines don’t care about us and we have no reason to care about the machine.
As for the people behind the machines, they have insulated themselves from customer contact and in the final analysis suffer no consequences from having abandoned the human element in the process. The top executives will still get their multi-million dollar salaries, the providers of the goods or services purchased with unsecured debt will have sold a product. The manufacturers of those products will have provided jobs and the only losers might be those holding stock in the lending institutions who could see a drop of a few dollars in their portfolios.
On the flip side, debt collectors will have greater job opportunities.
While most social movements are led by the younger generations, this one, should it gain traction, will be a rebellion of the older retired segment of the population.
Senior citizens living on fixed incomes and seeing their buying power eroded by the rising cost of living, coupled with having their creditors constantly seeking out new and creative ways to nickle and dime them, might come to the conclusion that no matter how good their intentions, they will never become debt free by paying only the monthly minimum due.
Despite the best advice of financial planners, many of these seniors simply cannot afford more than the smallest allowable payments and for them the obvious next step is to realize that some portion of their debts will eventually go into default even if they spend the balance of a lifetime trying to service them.
Given the choice between a life of penury, in service to a faceless, emotionless financial machine or sacrificing a sense of duty in exchange for the ability to squeeze a bit of pleasure out of one’s few remaining years, I would expect some number to choose to default on a loan in favor of a weekend in Dublin.
As computers replace more and more functions that were once person to person, the ease with which we can dismiss responsibility and obligation is sure to increase. Mrs. Smith, the loan officer we dealt with a half century ago, knew us and always asked how the kids were doing but the program that replaced her sees us only as ones and zeroes and is not programmed to care.
The obvious solution is for companies to bring back the personal touch, to add empathy to their business model and to give the public a human face to relate to, to care about and to feel a sense of obligation toward. I doubt that this will ever happen and so I predict that there will be an ever increasing number of people opting to simply walk away from debt should it become inconvenient to continue paying it.
If this debtor rebellion does take place we will never know because it would not be in the best interest of the financial institutions to allow that sort of information to become widespread. To do so would lower the bar for others and possibly create a snowball effect.
And this debtor rebellion will be less a backlash against the actual debt than a repudiation of the client dehumanization that has taken place within most of the corporations with which we have to deal.