Confronting Black America's Debt Problem
ED GORDON, host:
Many black Americans get a bad reputation for incurring debt more than the rest of America. But commentator Lester Spence doesn't see it that way. He says all Americans have more debt than their counterparts in other countries, and he says it's got more to do with government spending than with buying unaffordable items.
Professor LESTER SPENCE (Professor of Political Science, Johns Hopkins University): Economists have known for years that Americans generally bear more debt than their counterparts in other countries. Whereas a country like Japan, for example, has emphasized the importance of saving in its citizens, we have generally emphasized consumption, whether we're talking about high definition televisions or the newest in organic gourmet foods.
Looking at African-Americans in particular, how often have we heard it said that we spend more of our money on frivolous items? How often have we heard so-called black leaders talking about how black people are wasting their money by spending it outside of the community?
The most recent survey of consumer finances indicates that the debt of the typical American family rose 33 percent between 2001 and 2004. The average debt that the American family held increased by a full third. Now this begs the question: where does that increased debt come from? X-Box 360s? The newest Air Jordans? Too many trips to Disney World in gas-guzzling SUVs?
If we were talking about African-Americans alone, we wouldn't be surprised, would we? Again, according to some so-called black leaders, our money is more likely going into expensive Cadillac's that it is into savings bonds. Surely, our debt and the debt of Americans as a whole is going up because we're spending too much of our hard-earned money on luxury items that we have absolutely no business buying.
But we're not talking about African-Americans - at least not African-Americans alone. We're talking about Americans in general. And even if we were, blacks don't spend nearly as much money on consumption as pundits say we do.
So even though Microsoft was able to sell millions of X-Box 360s, the reason our debt is increasing has absolutely nothing to do with luxury spending. What is responsible? The increased cost of housing, education, and healthcare -basic expenses. In places like Washington, D.C., houses that once sold for $50,000 are now selling for at least six times as much. And rent in places without rent control are increasing at a similar pace.
Working class parents in urban, and even some suburban communities, are now almost automatically placing their children in private schools, forking over thousands of dollars to ensure that their kids get a decent shot at a good college. And if their children are lucky enough to get into a good college, they're going to be expected to fork over more and more of their paycheck as the amount of grant money provided by the government dwindles.
And, of course, we know that healthcare is going through the roof, even though research shows that countries with universal healthcare like Great Britain are providing double the healthcare at only half of the cost.
Discussion about the midterm elections has begun, and some have already talking about the 2008 presidential elections. I fully expect our debt burden to increase, particularly with the growing costs of the basics. We should urge that our newsmakers focus clearly on the Democratic and Republican response to this issue. We simply cannot afford anything less.
GORDON: Lester Spence is an assistant professor of political science at Johns Hopkins University.
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GORDON: This is NPR News.