Greetings all!
This post concerns a topic I seem to have ignored as
a singular topic; I have addressed it in a general sense, yet never directly as
its own issue. Namely, debt, both on the parts of debt possessed by individuals
and by nations. It seems to be something we talk about a lot, so it’s a great
time to address it. This week’s quote comes from Julia Gillard, the current
Prime Minister of Australia and head of the Australian Labor Party.
Moving on, debt is an omnipresent topic in both American
and European political debates. The U.S. has racked up over 16 trillion dollars
in debt, and many other developed nations are currently struggling with
unfavorable debt-to-GDP ratios as well. This can become a huge problem on
international markets because it scares off investors and buyers; having lots
of debt makes people think these countries won’t be able to pay off that debt. Logically,
this is sound given the current system of money changing hands in our global
economy. If you can’t trust someone with money, you don’t give them money.
Unfortunately, just like the “live within your means” adage, you can’t apply
these principles to nations. It’s more complex than that.
This is because, as always, governments do not
operate on the same levels as individuals. A person works solely for the
benefit of him or herself, or a family if they so choose to. However, a
government works in cycles solely for the benefit of its constituents (or at
least, such is the purpose of government). Government depends on public sector
workers to keep it running, and taxes to keep itself paid for. It then uses
this money and work force to improve the lives of others; such is the goal of a
society that is mutualistic. If a person functioned in the same manner, he or
she would probably fall into deep poverty trying to provide for everyone in a
matter of weeks.
Because governments function in a manner
fundamentally different from the way that individuals function with money, the
way that national debt is treated must be different than the way we treat
personal debt. Namely, being more forgiving towards debt is an absolute
necessity. Allow me to break this down further: governments are not businesses,
in any sense of the word. The central difference is that a business holds its
first loyalty to its executives and its shareholders; the consumers come
second. Such is the nature of private companies; they seek to serve themselves
and keep themselves buoyant. A government holds its first loyalty to absolutely
everyone in the country; that is why holding a job for the government is
considered public sector work. The government holds a direct interest in
providing for the interests of the public; if it fails in this regard, the
result is often protests, which if not addressed lead to revolutions and
sometimes violent civil wars, for example the current Syrian Civil War. While
in essence the government still serves to protect its interests of peace and
security, these interests are reflected by citizens; it is rare for any
populace to be hoping for war.
As such, governments do not focus solely on profits
like businesses do. The sole interest of a business is to function so that
profits are maximized without directly endangering the stability of the
business itself. If that means firing employees and cutting benefits, so be it.
If that means creating newer and better products, so be it; a business is
directly tied to its own success in a monetary sense alone. Governments,
however, focus on giving to citizens rather than to politicians. True, public
sector workers up to legislators have salaries, but that is out of necessity;
these people cannot work for free in a capitalist society. In the end, the
government runs on a model which is purely intended as generous to all, and
that is why debt on the part of that government must be treated differently.
I’ll present my example as Greece. Greece is a
nation hobbled by the sheer act of paying off its debts; the country recently
passed new
tax laws in order to service its payments, even though said
taxes will unreasonably punish just about everyone in the country that isn’t
already in poverty. The EU and Germany have been particularly harsh on Greece,
and world markets seem to shift on a dime each time a law is passed there. I’ve
heard countless times that we can’t count on Greece to repay its debts, that
the situation is so unstable and that is why the Eurozone is in crisis. But
let’s be honest; is there anyone out there that honestly believes Greece is
poor and unsustainable enough to actually not pay its debts? Does anyone
actually think that Greece, a country at the center of world trade for decades,
will default and fall into shambles during peacetime? The logical response is a
resounding no; we should not be so ready to doubt Greece, a nation which had
done fairly well for itself up until the 2008 financial crisis. However, our
unreasonable fears over Greece’s ability to pay these debts leads us to shake
up international markets and demand austerity from a people that grows
increasingly restless over the harsh measures lorded over their heads. If we
could learn to forgive these debts or extend the payments to a reasonable
timeframe, we likely would not have such an enormous problem over solvency of
the Euro. The same is true of Portugal, Spain, Italy, and Ireland, all nations
that have either been bailed out or are considered at risk of needing a
bailout. If we don’t let our fiscal fears rule our judgments of these nations,
we would see that we are causing our own distress. By exercising extra pressure
on these economies, we put undue stress on nations that cannot handle it. If we
ease up just a bit, I’m sure we wouldn’t be mired in such a mess.
The secondary topic of debt which I wish to address
is individual debt. In this part, I wish solely to focus on Americans, so a
brief apology to those international readers for not being too global on this. Anyway,
we as Americans seem to have an addiction to debt, or rather an addiction to
spending which puts us in debt. We consume pointless products using credit
cards that we probably shouldn't have in the first place. We rack up student
loan debt for colleges we weren’t prepared for and certainly couldn’t afford,
even with aid. We obviously have trouble giving and receiving loans from others
as a nation; we are compulsive, and rarely consider the ramifications of what
we’re doing with our money. However, as with governments, forgiveness and
loosening the stranglehold of debt is a viable solution.
Let me ask another question. How many of us know a
person who is an absolute mooch. They take your money but never pay it back,
mooch dinner off of you and friends and say they’ll “get you later,” etc. Most
of us know at least one person like this, especially if you hate them (or are
them). Most people would say that because people like this exist, debt should
not be so easily forgiven; because there will always be moochers that need to
learn a lesson about the value of money. But the thing is, for every moocher
friend you have, chances are the rest of your friends are the opposite. They
pay off loans quickly, they’re not routinely late on bills, etc. And the most
important thing about those moochers is that they will not learn that lesson
which debt is intended to teach. At that point, that lazy attitude is typically
ingrained, and it’s not something that will change without serious time in jail
(and anyone that suggests someone who can’t pay off their debts go to jail for
years is far too harsh on soft crime). By keeping the boot of debt on people
that honestly don’t deserve such treatment, we suppress the flow of money in
our economy. Every payment that comes with interest is damaging our masses of
consumers, and under a capitalist system it’s unsustainable.
That is all for this week, and I hope I’ve provided
sound reasoning for all of my points. I can still be contacted directly through
the comments here, and my email at zerospintop@live.com
is always open. I am also available for contact through Facebook, Google+,
DeviantArt, and Steam, so ask away as necessary. Good night, and this is
KnoFear, signing off.
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