Tuesday, July 7, 2015


West Germany signs up for its 50% debt reduction in 1953
What, exactly, is debt? The question takes on new urgency as, yet again, the economic wise men of the European Union declare that Greece must submit to their terms -- for, after all, is there not a great debt at stake? Not to address it in the EU's terms, clearly, would be irresponsible and disastrous -- and so, their ministers speak to Greece -- the cradle of the civilization they claim to represent -- as one would to a child.

The Greek government has debts, indeed, and Greek banks have still more. But what does this really mean? Nietzsche was hardly the first to notice that the German word for guilt (schuld) derives from the older concept of debt (schulden). In English texts, "forgive us our debts" was an older and more common form of the Lord's Prayer's "forgive us our trespasses." Debt is sin, Christ is our "redeemer," and entrance into the kingdom of heaven is to be -- in these terms -- a forgiveness of debts.

We in the U.S. like to pillory the profligate -- it's almost a national passion. Republicans in the US Congress took the lead in making personal bankruptcy more onerous, and have harped, from the Reagan era to our own, on the evil of deficits, and the need to cover any expense with a parallel cut. It's become almost a mantra with the Tea Party set.

But there's a problem here. For one, the debt of nations is not at all like the debt of people. Ordinary people can't print their own currency, or re-value it, or issue bonds to fund their new chimney. Nations can do this, because they have the larger essential reserves -- a labor force, roads, cities, minerals and other natural resources to generate future wealth, and that creates the ability to evaluate their worth, and trade in it.  But even more than this, the debt of nations is not guilt, nor is their spending like the profligacy of private persons.

Greece has suffered. It has suffered for its overspending (which, as Nobel Laureate Paul Krugman has pointed out, was no so much more horrific than that of many other nations), for its failure to live up to the expectations of the creditors who loaned it and its banks generous funds during what seemed to be boom times. The EU forces have imposed austerity to an amazing extent -- cuts in pensions, tax increases, cuts in social services, privatization of national treasures -- its entire economy has shrunk by more than a quarter. If Greece today is less well-prepared to pay back its debts -- or rather, the debts of its banks -- than it was several years ago, it's largely because it's taken the EU prescription of austerity.

And what is "austerity"? Very clearly, it is a special sort of punishment, one reserved to errant nations. They must be made to pay! Even if every last citizen is to starve, even if the cure kills the patient, pay they must. The latest statements from the German finance minister make it quite clear that the goal of the latest agreement, is not to make it more likely to recoup Greek debt -- rather, it is to punish the Greeks.

One should see at a glance how much this sort of "debt" is like "guilt." But there's one way in which "debt" is different, when it's money that's at stake: those who loan money expect a profit from it. They don't lend out of kindness, nor was the debt incurred out of errant sins. They gave because they expected to receive, and then some.

But let's not focus on Greece -- let's look at Ireland, a country which willingly accepted the EU's austerity prescriptions. Now, seven years later, we are told that there are "signs of recovery" -- signs evident to economists, its seems, but hard for the ordinary Irish citizen to see. Any number of years is too much to endure such pain, the more so when all it really does is satisfy the creditors (who, one might imagine, might prefer to be satisfied sooner -- but not, it seems, as much as they prefer the glee of punishing another).

And seven years, interestingly, the the time laid out for Sh'mittah -- the traditional forgiveness of debts in the Jewish Torah. In that year, debts are to be forgiven, and the poor welcomed to glean in the fields. Seems to me it's time.

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