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  • Writer's pictureartgainz

A Solution to Debt?

"The Money Lender” (1842) by Charpentier Auguste

One of the curses of the modern world is the debt epidemic. Almost everyone is in debt and live most, if not of all, of their adult lives in debt. It grows faster than our ability to pay it back. The conspiracy theorists talk about us all being “debt slaves”, and they can’t be far off from the truth.

Most of us, I think, understand that debt is horrible, and building a society that runs on debt will probably result in huge problems at some point—larger problems than whatever we currently face. But any normal person who has sat down and thought about it has probably run up against a particular roadblock: the question of whether a modern capitalist economy could be created or sustain itself without debt. To go into business, most people—even highly intelligent people—borrow money. Business tycoon and President Donald Trump himself started out, as he said, with “a small loan of a million dollars”, which he then turned into a vast corporate empire.

Keynesian economists “solve” the problem of debt by pretending that it doesn’t exist. They suggest perpetually kicking the can of debt further and further down the road. Each generation leaves the debt problem to be dealt with by the next generation. This is insane, perverse, and historically illiterate. The bill will come due at some point, both for governments and individuals.

Communists “solved” the problem of debt by making everything “free” and paying for everything out of the public purse, which of course created infinitely more problems than existed in the first place.

Socialists and leftists would solve the problem of debt through various social programs, universal basic income, and providing various goods and services to the public for free. Like the Communist solution, this creates more problems than it solves: dis-incentivizing hard work, dis-incentivizing innovation, necessitating a bloated bureaucracy prone to corruption, propagating ugly attitudes among service providers, etc.

I have heard that one solution proposed by Christian theologians during the Middle Ages was “Jubilee laws”, named after the Old Testament “Jubilee” event. The idea was that no loan could be made without a clause in the contract stipulating that if the debt had not been paid off after a certain amount of time, the debt would be forgiven. The length of time a person had to pay off the loan could vary according to different factors, probably ranging between a few months to a few decades.

This idea never really caught on in the Western world due the influence of powerful moneylenders who did not want anything hampering their debt collection, but I think Jubilee laws are worth reconsidering as a solution to the debt problem. In my opinion, they should be written into constitutions.

But, hey! That’s ridiculous! No bank or moneylender would lend money under those conditions, because everyone would just borrow a billion dollars, wait out the Jubilee period, and then be let off scot free!

(I once knew a guy who said astoundingly insightful things like this whenever I talked to him about politics. He was a former staff member in a Liberal election campaign here in Canada.)

Would any bank be dumb enough to loan you a billion dollars if it didn't look like you could pay it back? No.

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