Understanding Debt

Ben Cohen
Publish date:
Social count:

Part of the reason why I write is to help readers decipher the jargon politicians and economists chuck at us on a daily basis. Economists in particular specialize in talking in a code designed to make them seem smarter than everyone else, thereby protecting their status as intellectuals.

I'm not particularly clever, but I have done enough research on the subject to know that most of what they say really isn't too difficult to understand once you get some of the basics down. And once you get the basics, it becomes crystal clear that our economic system is a giant con game designed to protect the interests of the rich and powerful.

Take the issue of 'debt' - a word that is bandied about by politicians and economists to either instill fear or reverence in the public. When times are good, debt is apparently good (it can be used for leverage, starting businesses etc), and when times are bad, debt is apparently bad (particularly if a Democrat is in power). So which is it?

Let's take the concept of third world debt, a 'debt' that is universally seen as bad. Writes Noam Chomsky:

The first thing to bear in mind is that debt is not an economic problem. It's a political problem. The debt is an ideological construction......

Let's take the Brazilian debt. Who borrowed it? Not the peasants, not the working people. In fact the large majority of the population of Brazil didn't have anything to do with the debt, but they're being asked to pay it. That's like you being asked to pay if I spent my money somewhere else and couldn't pay it back. To the extent that there is a debt -- if you believe in capitalist principles -- the debt ought to be paid by the people who borrowed it. In this case they are military dictators, some landowners and the super-rich.

The same can be said of the US debt - a result of a hugely bloated military budget, a reckless financial industry and the failure of the super rich to pay their fair share of taxes. Who pays the debt when it all goes wrong? You guessed it, the middle classes and the working poor, even though they had little to do with creating it.

So when politicians rant on and on about the debt, it would be a good idea to do a little research to see if they were concerned about the escalating debt when times were good (or a Republican was in power). Where was Newt Gingrich on the issue of debt when George Bush was slashing taxes for the mega wealthy and borrowing to go to war? Where were most of the current deficit hawks when a Republican administration was racking up one of the biggest unpaid bills in US history? Dick Cheney's line that "Reagan proved deficits don't matter" encapsulates the extraordinary hypocrisy and double standards that exist within the modern day conservative movement.

The truth is, debt is good when the rich use it to get richer, and debt is bad only when the rich have to pay for it.

Above all, 'debt' is just a word used to achieve political aims - to assert power or to avoid blame depending on the circumstance.