One Debt Solution:
Bring Back the Bawler-Outers


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© Jack Cashill
Published in Ingramsonline.com - April 2013

Maybe the best way to address our approach to debt issues is by restoring a sense of shame.

Kansas City, Mo., made news recently when Fitch, which ranks the creditworthiness of cities and states, upgraded our debt status. That is good. What is not so good is that we were upgraded from “negative” to “stable.” Celebrating that hike is like celebrating the school district’s regaining partial accreditation status or the Royals climbing out of the cellar. Unfortunately, we do both.

In Kansas City, when we want something, we borrow to get it: a bigger Bartle Hall, new water lines—how about a fun new entertainment district! No problem. We just grab the dough and pass the buck to the next generation. In the process, we’ve saddled every man, woman and child with more than $5,000 in debt—and that doesn’t include the thousands they have saddled themselves with.

I would be inclined to recommend a complete funding freeze, but we would need to make one exception. Kansas City should hire its own bawler-outer. To appreciate the role of the bawler-outer requires a trip down debtor’s lane.

In the way of background, when Alexis de Tocqueville arrived in the United States in May 1831, he discovered that there was nothing unique about American character traits. He had known of people in other countries who were hardworking, restless, ambitious, religious, egalitarian, and individualistic. He had not known, however, nor had the world seen, an entire nation of such people. To understand those people, one had to understand the paradox of equality, and this Tocqueville assessed early on.

As he saw things, “When an immense field for competition is thrown open to all, when wealth is amassed or dissipated in the shortest possible space of time amid the turmoil of democracy, visions of sudden and easy fortunes, of great possessions easily won and lost, of chance under all its forms haunt the mind.”

Under these circumstances, “The present looms large … and men seek only to think about tomorrow.” If Kansas City’s City Council thought even that far ahead, it would be a breakthrough.

Charles Dickens had a more malign view of America’s flirtation with debt. In his sour grapes tour of America 10 years after Tocqueville’s, Dickens added “the love of ‘smart’ dealing” to the causes of the nation’s periodic insolvency. “This smartness,” he wrote, “has done more in a few years to impair the public credit, and to cripple the public resources, than dull honesty, however rash, could have effected in a century.” Dickens was particularly troubled by cities that overindulged. We could have shown him a thing or two!

Still, it was not just foreign social critics fretting out loud about the easy acceptance of debt by both individuals and governments. Mark Twain told of a speculator overheard boasting, “I wasn’t worth a cent two years ago, and now I owe two millions of dollars.” Twain, of course, was from Missouri.

To accommodate the American urge to overspend, a whole rash of institutions emerged. One was a European import with a vintage as old as Rome—the pawn shop. A homegrown alternative was the small loan agency. These shops flirted with legality throughout most of the 19th century, especially in those jurisdictions that enforced an interest ceiling of less than 10 percent.

To turn a profit on small loans with high default rates, these agencies had to charge 20 percent interest per annum or more. As collateral, they accepted chattel mortgages or attached a worker’s wages, the latter being the modus operandi of today’s payday loan operations. If there is one industry that has thrived in these parts lately, it is surely this one. Pawn brokers haven’t done too badly, either.

Sometime in the late 19th cent-ury, reformers adapted the slur on real estate speculators, “land shark,” to the more memorable “loan shark,” applied to small lenders. Borrowers often turned to loan sharks to settle up debts incurred through a seductive new craze known as installment buying. In the early part of the 19th century, this phenomenon was reserved for people of means and was offered by retailers as something of a minor honor.

Not until the 1880s did the working classes get in on the game. To recruit them large retailers hired “pullers-in,” middlemen who spoke the customer’s language, literally, and introduced them to the wonders of buying on the installment plan, American-style. Today, the government does the pulling in. As I write this, I am reading that President Obama is “asking” the nation’s lenders to ease their credit terms for home buyers. Did we learn nothing from 2008?

Late 19th-century American cities were more diverse than they had ever been or have been since. New arrivals, and they came by the shiploads on a daily basis, did not show up wearing LeBron jerseys with iPods on their belt. They came as strangers to a strange land and appreciated the rope-showing service of the retailers’ middlemen. A memoirist of the period recounts how one female middleman—middleperson?—sold the writer’s mother a sewing machine, then showed up once a week for the next 25 years to collect the 25-cent installment owed.

Early American loan sharks rarely had to break legs to collect their loans. They had another weapon in their arsenal, one that is largely denied them today—shame! Among a people who had not yet been encouraged by the elite and the media to see themselves as victims, shaming still worked.

Given the widespread acceptance of Biblical morality and a conscience to filter it, the worst pain that lenders inflicted on a deadbeat borrower was to sic a “bawler-outer” on him. Almost always a female, the bawler-outer would try to catch the defaulter in front of friends or coworkers and—you guessed it—bawl him out.

Imagine how much more fiscally sound our city would be if a bawler-outer sat in on every City Council meeting. Any volunteers?

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