Discouraging Consumer Credit; Encouraging Producer Credit: Is This a Fix?

An online columnist for the Wall Street Journal takes a sardonic look at the recent thawing of American credit card spending: Debt, the American Way.

It’s really an extended review of a book by Louis Hyman called Borrow: The American Way of Debt. Hyman’s main thesis is: once upon a time, credit was used to aid production. It’s not being used to aid consumption. And therein lies the problem.

“It created the middle class we know today,” the WJS writer says, “but it’s also destroying it.”

Also consider this point: “Consumer debt has crowded out business debt. …GE Capital can make more money issuing credit cards to consumers than it can loaning money to businesses.”

One of Hyman’s suggestions towards rectifying what he sees as an untenable situation is to encourage credit flow to those who produce and discourage credit to those who consume.

That’s a pretty aggressive suggestion — and one that seems almost certain to fail. If there’s one thing that Americans have come to expect, it’s access to credit regardless of merit. If there’s two things Americans have come to expect, it’s that they can use that credit to order off the Super Size Menu. (Anna Wintour once described us, politely, as “little houses.”)

What repercussions for the collection industry can you see from a move like that — from discouraging consumer credit in order to encourage credit to producers? We’d love to hear from you in the comments.