A Matter Of Life and Debt?

The concept of collective debt is being used by politicians to force through vicious austerity policies. But history shows that the rich have always done this to maintain their power. And now it turns out, the numbers don't add up either.
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The concept of collective debt is being used by politicians to force through vicious austerity policies. But history shows that the rich have always done this to maintain their power. And now it turns out, the numbers don't add up either.

Debt: Used by the rich to control everyone else

Facts can be a real encumbrance when your trying to enforce austerity on the impoverished masses. Adherents of the 'keep-cutting-until-it-grows philosophy' of economics suffered a blow last week as the story emerged that a famed pro-austerity publication by Harvard professors Carmen Reinhart and Kenneth Rogoff was based upon faulty spreadsheet data which had skewed its subsequent results. That such basic computing errors lay behind ideas of Reinhart and Rogoff, who the likes of Paul Ryan and U.K chancellor George Osborne had cited as providing the intellectual authority for their policies, was the equivalent of atheists finding out Christopher Hitchens had just been resurrected by the new Pope and was converting to Catholicism. To confound the pain, the flaw in the spreadsheets wasn't discovered by a rival Keynesian economics at another Ivy League powerhouse; it was found by Thomas Herndon, a 28-year old grad student at Umass, Amherst. It is easy to see why austerity politicians want to cut funding for all academia bar elitist institutions and traditional programmes. If you let too many of these curious little people into higher education, who knows what else they might unravel?

Reinhart and Rogoff's popular book 'This Time Is Different' was based on their original paper titled: 'Growth in a Time of Debt.' Their ideas helped provide an axis upon which the narrative of global recession was reorientated away from a tale of financial sector incompetence towards a story of collective debt. For Reinhart and Rogoff, debt was everything. Regardless of the causes of the crash, for us to recover, we had to simply focus on reducing our debt-to-G.D.P. Ratio, regardless of the externalities of human suffering. This about-turn was employed to turn public rage internally, for as London mayor Boris Johnson told constituents, 'the time for bashing bankers had come to end.' If people wanted someone to blame for the cuts and falling living standards then they should blame themselves: we had all lived beyond our means. A simplistic conflation of sovereign debt with household debt was repeated by politicians on both sides of the Atlantic: i.e “think about it like a mum saving on her weekly shopping.” Of course economies don't work anything like households but that was beside the point. The aim was to make citizens look at the coming cuts to vital social programmes as the price they had to pay for their own previous extravagance.

Politicians know the idea of debt carries a moral weight that is almost impossible to fight against. It delivers the debtor into the complete control of the creditor and if the debt can be imposed on a person for actions outside of their control, it can take away the ideological foundations for calling out any resulting injustice. Debt was the rationale by which Greco-Roman armies took slaves; the slaves owed the conquerors, who could have killed them, their lives and so their unending labour was payment for this debt. Debt is the basis on which Christianity demands obedience to God, continued submission is the debt that the sinner owes to Jesus for his sacrifice on the cross. What unites these two examples is that they are, like the best debts, essentially unpayable. Now we face another unpayable debt, the current sovereign debts of nation-states, which to the lay person seem as infinite as Jehovah, with its figures that rise into trillions of dollars.

Radical Greek Opposition leader Alexis Tsipras  described the global debt crisis as ‘so good that if it did not exist, the elites would have had to invent it.’ The idea that 'we have to pay our debts' makes the public reluctantly accept the closing of another library or another cut back in health care. Yet the narrative is disingenuous as politicians never mention that, unlike say a simple bank loan, sovereign debt will never be paid back. It is not supposed to be paid back, it is the motor via which all modern economies function. Apart from one year, the U.S the federal government has been in debt every year since 1776! The 'communal sacrifice' of austerity is not meant to pay back the debts of the nation, it is an ideological move aimed at crystallizing the structural inequality of the neoliberal era by breaking down the state funded step-ladders that had helped people improve their lives.

In his excellent book 5000 years of Debt, David Graeber undermines the authority of debt that Reinhart and Rogoff promote. He describes how throughout history, debt forgiveness has ended poisonous circles of suffering. The Occupy Strike Debt programme has began doing this on a small scale by buying up tens of thousands of dollars of personal debt from creditors and forgiving the debtors free of charge. However, despite Reinhart and Rogoff's work being weakened, this latest hiccup to the proponents of global austerity is likely to have little impact on their policy ideas; 'we are cutting to pay back your debt' is simply too good of an argument to give up. Despite this embarrassing revelation and the continued failure of austerity in Europe these, Reinhart and Rogoff have defended their original position. This is because their ideas are less about details and more about providing a framework to justify the pain that everyday people are enduring.

And they would have got away with it too if not for that pesky kid.

(Image via Shutterstock)