Op-Ed: The Hidden Cost of Household Debt
Have you ever considered how remarkable it is that your grandparents used to save up to buy things? It conjures up a quaint image of a ceramic piggy bank rattling with coins and a dusty walk to the corner store. By contrast, today’s Canadians have embraced the phenomenon of perpetual debt, holding a staggering net household debt of $1.4 trillion and counting. Some economists say that spending makes the economy tick. While it may be a major economic driver, it is not necessarily sustainable when you consider our environment cannot continue to support the consumption that goes along with this spending.
Driven by consumption, household debt is the name given to any debt held by a household, including mortgages and consumer debt, which consists of tabs racked up on financial products like credit cards, lines of credit, and automobile loans. From shiny new cars to pool noodles and from bottled water to disposable diapers, Canadians are increasingly spending more relative to what they earn. Keynesian economic theory, dating back to post-WWII mentality and reality, tells us that spending is what pulls us out of recession and makes the economy grow. However, our politicians and society have perhaps gone a little too far in wholeheartedly embracing this magic idea of spending as stimulus. Our collective consumption of goods, derived as they are from finite natural resources, has turned into a frenzy of consumerism that is leaving us indebted both financially and environmentally.
It’s an equation that a kindergartener could grasp: as we consume more, we extract more from our limited natural resources to keep up with material production. There is consensus in the scientific literature that dangerous levels of pollution and over-extraction threaten our aquatic and terrestrial systems. This is amounting to a colossal debt owed to the natural world.
The concept of debt is based on the idea that what is borrowed will eventually be paid back to the lender. But what if we are not able to pay back what we have borrowed from our ecosystems to make all of these consumer products? According to the United Nations Convention on Biodiversity, human actions, including the resource over-exploitation and pollution required to make consumer products, are collectively causing a massive decline in species populations and biodiversity. Almost half of all amphibian and bird species are experiencing shrinking populations globally. Our indulgence, fed by ocean extraction and pollution, has seen the collapse of coastal fisheries and the rapid melting of sea-ice in Canadian waters. Maybe we can pay Mother Earth back with a gift certificate?
