Debt, Uncertainty, and Adaptation

Do you remember
When you caught your lucky break
You're looking back now
And it seems like a mistake
--John Waite

We have discussed it before. Debt reduces freedom. Borrowing creates the illusion of freedom, as it allows people to consume more in the here and now.

In reality, debt involves a contract where the borrower enters into conditions of voluntary servitude for the lender. Resources borrowed from the lender must be paid back by the debtor's future production.

Borrowers are less free in the future in that they work for others rather than for themselves. They are less capable of pursuing their interests.

Debt is particularly burdensome as environmental uncertainty grows. Uncertainty raises prospects of unforeseen events: illness, layoffs, unforeseen opportunities, breakdowns. Debt reduces capacity for coping with turbulent environments. For coping with change.

Debt creates conditions that impair adaptation.