Debt becomes a sacred obligation only if it is owed by the poor and vulnerable to the rich and powerful, writes Carol Hunt
Newstalk radio's resident philosopher Dr Graham Finlay gave us a little insight into the economic genius of Julius Caesar last Tuesday on Moncrieff, it being the anniversary of his infamous crossing of the Rubicon river.
Finlay referenced Caesar's debt "forgiveness" schemes, introduced after he took power from the corrupt patrician oligarchy which had eviscerated the political institutions of the Republic.
Though Rome was in the middle of a debt crisis, with property prices collapsing and thousands of people finding themselves inured to debts, the creditor classes and status quo refused to contemplate any type of debt reform for the rank and file, describing it as the equivalent of robbery.
It sounds all too familiar.
When Caesar, hero of the Plebs, wrenched power from these Roman elites, he introduced a
more equitable debt restructuring scheme along with major land reform and other progressive economic policies. Many noble noses were out of joint. So they killed him.
The history of debt and how we have approached it through the centuries is quite fascinating, particularly now we once again find ourselves in a situation not a million miles away from Caesar's Rome. What is especially interesting is that most of what we assume to be new and innovative about our current use of "virtual" money is nothing of the sort.
Virtual money is the origin of the species.
According to anthropologist David Graeber in Debt: The First 5,000 Years, the credit system, tabs, even expense accounts -- all these existed long before hard currency became the norm.
Specifically, Graeber noticed that debt (when racked up by governments, corporations, banks or the extremely wealthy) can always be renegotiated or written off. That's how it has always been throughout world history. It's how the system works.
It's only when debts are owed from the poor to the rich that issues such as moral hazard are introduced. Only then does debt become a sacred obligation. To a point, it's a way of keeping the cash/power flowing upwards.
But, usually, when things got to a real social crisis, such hypocritical standards were dropped. In Biblical times there was the Jubilee year when debts were cancelled (forgive us our trespasses?). In the Middle Ages there were complete bans on charging interest. More recently we've had the Third World Drop the Debt project (of which Graeber was a pioneer and in which Bono features prominently).
The big difference, says Graeber, between the present and what went before is that previously when "virtual" money was in use, precautions were taken -- including the creation of institutions which would prevent creditors from teaming up with bureaucrats and politicians in order to bleed everybody dry -- to protect debtors.
Otherwise you'd end up with the masses enslaved to the few: a situation which persisted before the original Jubilee (it's in the Book of Leviticus), when enslaved people were freed from debts, their lands restored and inequalities they suffered removed.
Fast-forward to the 21st Century and we seem to be going backwards. It is creditors who are protected at the expense of debtors, corporations at the expense of citizens, banks at the expense of nations -- and yet we seem to think this is not just normal but moral.
Are we being conned?
Damn right we are.
To demonstrate how ludicrous our moral benchmarking has become, Graeber tells of an encounter with a well-meaning lawyer who worked with anti-poverty groups in London. When he talked to her about a debt amnesty for Africa (30 years of money flowing from the poorest countries to the richest was quite enough, he said), she expressed astonishment that he could think this morally right, saying: "But, they'd borrowed the money! Surely one must pay one's debts?"
The fact that it was corrupt dictators who had been showered with cash from Western financial corporations (most of which went instantly into Swiss bank accounts) did not seem to matter; nor that it was not them or their cronies who were forced to pay the cash back, but poor, innocent families.
Nor did it seem to bother her that -- through the miracle of compound interest -- what had been borrowed had been repaid three or four times over but it still didn't made a dent in the principal. Because a debt is a debt is a debt, eh?
Like the next "debt" we are due to pay to unguaranteed, unsecured senior Anglo bondholders. I believe it is €1,250,000,000 this month.
On January 25.
That's next week, right?
Screw the elderly, the kids, the unemployed, the sick, the disabled; screw public works, the hospitals, and the schools.
Screw the fact that, by paying all these unsecured bonds, we will regularly need more financial "assistance" just to keep the lights on as the economy tanks and we end up as Troika debt slaves.
Screw the country, because a debt is a debt, right?
And the polite gentlemen of the Troika -- the high finance version of the blokes sent by moneylenders to break your legs -- are here in town to make sure their debt-collection is on target.
This is how the present situation in Ireland will be described in future history books by shocked anthropologists, historians and economists. Though the vast majority of us had no truck with the likes of Anglo Irish Bank or its cohorts, as citizens of a country whose rulers accepted the debts of rogue bankers, we have been sacrificed -- like the virgin daughter of some early medieval debauched gambler or the oppressed peoples of an African dictatorship -- as payment.
Because, as they keep telling us: a debt is a debt is a debt.
Do you not feel that the odds have been rigged in someone else's favour?
Or that the banks and bondholders have wangled themselves a win-win situation without any risk and with guaranteed profits?
Because they have.
As Graeber points out, even the statement "one has to pay one's debts" isn't correct according to standard economic theory. A lender is supposed to accept a certain degree of risk, otherwise what's to stop them handing out huge amounts of cash to money to people whom they know won't be able to pay it back?
That's not a free market, that's stacking the dice. It's immoral -- and in a just world it would also be illegal.
Surely it's immoral to sell people stuff that really isn't what it says on the packet -- if not illegal?
By insisting that modern methods of financing were dazzlingly original, companies such as Goldman Sachs were able to come up with strange new concepts like credit default swaps, collateralised debt obligations and so on -- which sounded very clever indeed but were really just sophisticated ways of allowing testosterone-fuelled blokes to gamble recklessly with other people's money and earn themselves walloping great salaries and bonuses while they were at it.
Genius or what?
For about five minutes after reading one of those books on the global meltdown, I understood what some of these terms meant. Then I promptly forgot.
Then I realised that it didn't matter -- a child could have told me they were simple swindles dressed up to confuse people; and if there was no law against them, well, that made them legal swindles.
Ditto all the schmoozing and spending and sucking up; the ducking and diving and moving of money; the unauthorised loans, the lies and misrepresentations, etc, etc that went on here in Ireland.
The banks and the finance guys -- both here and in the US -- went into cahoots with the property developers; both then cosied up to the politicians on the golf course, and between them they screwed the economy.
And who pays? We do.
Again and again and again.
As I've noted, the next date for coughing up is January 25.
And all over the country ordinary citizens are finally beginning to assemble, to march, to protest, to say: "No, we are not your debt slaves."
Because, to quote Franklin Delano Roosevelt (not a Caesar, but close): "We need a New Deal. This is more than a political campaign. This is a call to arms."