Term Paper: College Campus Across the Country

Pages: 6 (2604 words)  ·  Bibliography Sources: 1+  ·  Level: College Senior  ·  Topic: Economics  ·  Buy This Paper

SAMPLE EXCERPT:

[. . .] " Ormond traces Martin's spending to "shame" that she "lost a job," and suggests that Martin will not even use her purchases because "every time" Martin will look at those purchases, she will be "reminded of the fear" she felt when she bought it. (Martin 246) But what Ormond says is true -- many compulsive shoppers do not even touch the purchases they make or take them out of their wrapping.

Beyond even this, however, Ormond touches upon an important point. The same emotional forces that drive people to buy on credit -- shame, desperation with their present economic circumstances, depression, and false hope in the impulse of the moment, are all of the same forces that drove people into the circumstances of indentured servitude. Joking references are made to 'retail therapy' in the popular media. Such therapy usually involves only healing the holes in the wallets of the credit card company and retailers, rather than ordinary consumers who are spending beyond their means to medicate themselves from depression or other woes.

The example cited above also highlights another vulnerable population victimized by a reliance upon credit cards besides students -- women. Women are far more likely to spend in excess of their means than their male counterparts on depreciable consumer goods, and the popular media only serves to encourage this. Women are also, on average, far more likely to suffer from depression than men. Besides students and the poor, credit card companies are thus also quite skillful at targeting this other quite vulnerable population. In her memoir of drug addiction and depression, entitled, Now, More, and Again, Elizabeth Wurtzel states: "in an age when sophomores in college have eight-thousand-dollar spending limits on their gold and platinum plastic. I defaulted on my student loans, I neglected to pay my taxes for a year or two...If Argentina were a person, she'd be me." (Wurtzel 60-61)

However, it is important to note that the popular media is not entirely irresponsible in regards to its reporting on credit card debt. To offer a parallel example to the article cited above from Elle, "Wallet Watch" in Glamour magazine states that "zero interest may not be in your interest." Beth Kobliner points out that although stores offer zero percent financing on many large purchases and store credit cards, nine-two percent of consumers still end up paying interest. If an individual can't pay off the store on time, the interest rate "kicks in" at an exorbitantly high rate, often as high as twenty-seven percent, hardly a bargain. (Kobliner 166) To go back to the idea of investment, once again this is an example of buying on credit not being an investment, but merely an impulse purchase of a non-appreciable asset that costs more than one bargained for at the outset.

To again return to the example of indentured servitude, this is again reminiscent of some of the contracts used by individuals who were suffering under that institution. The individual was promised passage in exchange for the performance of certain duties. However, in many contracts, if the individual was unable to meet his duties, the length of his period of servitude was lengthened. Depending upon the cruelty of the master and the master's willingness to take advantage of that individual's personal circumstances, that individual was often forced into longer periods of servitude because he was unable to meet the stringent requirements for that master's determination of what the rather vaguely defined duties were. (Indentured Servitude Contract in 17th Century Virginia. Stratford Hall History Resource of Historical Documents)

Indentured servitude and credit cards both fly in the face of the idea of informed choice and consent. The exorbitant interest rates of store credit and of credit cards in general are often not fully detailed to potential consumers of credit. Little informed consent can be given, particularly when targeting vulnerable populations of the depressed, the young, and also women who may have little economic experience. Simply because something appears in fine print does little to counteract the cultural stress that spending is good and that rampant consumerism can increase one's personal status and wealth. The consequences, like sharecropping and indentured servitude, may be detailed in the contract, but often are not in such a fashion to make them comprehensible. Furthermore, they take advantage of people at vulnerable moments, such as emancipation, or when they are at their most economically downtrodden. Like sharecroppers, who paid for land and tools on credit in the hopes of paying it back in crops, so people pay for initially no-interest credit that jumps up to skyrocketing rates. An imbalance of skewed information yields no informed economic consent at all, as is the rational behind insider trading laws.

The idea that credit enables individuals to invest and improve their economic circumstances is only true perhaps in such cases as student loans, which is not quite the same thing as a 'credit card.' Again, to return to the Harvard Business Review, it is true, that "wealth concentration can be influenced. Increasing the number of links in the network or the total amount of money flowing through an economy tends to decrease wealth disparities; increasing investment returns or volatility tends to increase it." But credit card purchases are seldom investments that appreciate, like education; instead, they tend to be commodities that depreciate in value. Furthermore, real wealth is generated by an exchange of information, increasing links in a system of economic information, while most people enter into credit card agreements in a de facto state of unbalanced information.

So, when one reads articles in the popular media encouraging one to spend, spend, spend, to help the economy, or when one sees an individual hawking a credit card, the best economic advice is to think carefully about what one is purchasing and why. Although the reasoning one makes in the heat of the moment may be persuasive, the long-range economic considerations must be carefully weighted before signing one's name on the proverbial dotted line.

Works Cited

Three Non-Academic Resources:

Kobliner, Beth. "Wallet Watch." Glamour. May 2002, p. 166.

Martin, Nina. "Debt, Me Worry?" Elle. April 2002, pp. 134-136; 246.

Wurtzel, Elizabeth. Now, More, and Again. New York: Simon & Schuster, 2002.

One Additional Non-Academic Resource:

Student Credit.com http://www.studentcredit.com/learn.htm

Two Academic Resources, One Journal:

Africans in America. PBS Online. WGBH Boston Website. http://www.pbs.org/wgbh/aia/part1/1narr3.html

Buchanan, Mark.

Wealth Happens." Harvard Business Review. April 2002, "The Big Picture" Column.

Additional Academic

Works Cited

Indentured Servitude Contract in 17th Century Virginia. Stratford Hall History Resource of Historical Documents. http://www.history.pdx.edu/hst201/headrts.htm

Encarta Encyclopedia. "Sharecropping." [END OF PREVIEW]

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