At The Baffler, Dean Baker has a few bones to pick with his fellow economists, especially with deficit hawks and wielders of big scary numbers:
We continually hear, from political demagogues and their policy enablers alike, about the $20 trillion national debt that we are passing on to our children. As House Speaker Paul Ryan recently put it, the need to “tackle the nearly $20 trillion national debt” is at the top of the country’s priority list.
This line surely scores big in focus groups, where politicians test the best ways to alarm their audiences. However, it would fail if the point were to convey information. Few Americans have any idea how big the federal budget or the economy is. That means they have no way of assessing the meaning of a $20 trillion national debt. Sure, it’s huge. But the debt would also be huge if it were $2 trillion or $200 trillion. Presenting a huge number like the $20 trillion national debt, without any context, tells audiences nothing.
This sort of game-playing happens with budget numbers all the time. If I wanted to convince readers that we were spending a huge amount trying to help the poor, I could say that we are spending more than $17 billion a year on Temporary Assistance for Needy Families (TANF), the program created by the 1996 welfare reform law. I might convince readers of our generosity to the world’s poor by noting that we spend $31 billion a year on foreign aid. But people would probably be far less impressed if they were told that TANF spending was just over 0.4 percent of the total budget and foreign aid was equal to 0.8 percent of federal spending.
The practice of expressing budget numbers in dollar terms that virtually no one understands is inexcusable.
Baker goes on to eviscerate his colleagues’ obsession with debt, inflation, and taxation, noting that there are more important social benefits than can be obtained simply by keeping marginal tax rates low:
We should remember that we will pass down a whole society to our kids—including the natural environment that underwrites the quality of life of future generations. If the cost of ensuring that large numbers of children do not grow up in poverty and that the planet is not destroyed by global warming is a somewhat higher current or future tax burden, that hardly seems like a bad deal—especially if the burden is apportioned fairly. Now suppose, by contrast, that we hand our kids a country in which large segments of the population are unhealthy and uneducated and the environment has been devastated by global warming, but we have managed to pay off the national debt. That is, after all, the future that many in the mainstream of the economics profession are prescribing for the country. Somehow, I don’t see future generations thanking us.
Speaking of debt: tracing the historical meanings of the forgiveness enjoined in the Lord’s Prayer, Marcia Pally shows that the early Church considered the prayer’s forgivable “debts” to include financial debts. According to Ms. Pally, only in the early modern era, the era of nascent capitalism, did “debts” became limited to moral “trespasses”.
Pally then considers the possible consequences of returning to, and taking seriously, the prayer’s original meaning:
Forgiveness of financial debt has been part of the Prayer's long history, not surprisingly, given Jesus's many teachings to give both spiritual and material aid to the needy. What implications might this have for present law and policy?
One might look, for instance, at home foreclosure, which after the 2008 financial crisis had devastating effects on families and the economy. By 2013, the number of U.S. foreclosures had reached five million, worse proportionately than during the 1930s Depression.
To avoid this sort of societal tragedy, alternative procedures were implemented by Israel in 2008, requiring that banks find alternate housing for families before they could evict. As banks do not want to spend time finding court-approved housing for each defaulting family, the incentive shifted from eviction to developing reasonable payment plans that keep families at home. Foreclosures dropped, along with the damage to families and society. Despite the concerns of critics, Israeli banks remained solidly profitable.
Banks having to find housing options for its customers! That’s akin to employers having to find jobs (and/or pay for retraining) for employees before “downsizing” a company or outsourcing its jobs--which, come to think of it, is an excellent idea, as Marcia Pally recognizes:
Another idea could be the development of regional banks dedicated to local residents and businesses, and working with them on investment, budgeting, and best practices throughout business development, not just when bankruptcy looms. In this way, borrowing could be adjusted before it becomes unmanageable debt, a pre-emptive forgiveness far more productive than letting businesses fail. A parallel pre-emptive policy is that, upon closure of larger firms, businesses - in cooperation with regional and national government - could fund retraining and regional redevelopment in new industries, thus preventing unemployment and debt accumulation among an unemployed workforce.
Even more radical is Pally’s idea that “bailouts” be replaced by “bail-ins” paid for by large investors:
Still another proposal is to restructure debt throughout the economy. The current system of public bailouts for troubled private firms (as we saw in 2009) shifts taxpayer dollars from education, infrastructure, and so on to private banks that failed owing to their own imprudence. Bail-ins, by contrast, mandate that large investors in banks and brokerage houses not only reap profits in good times but share risk of loss. Should a bank falter, large investors would bail-in with funds to stabilize it and set it on a productive course.
“Debt forgiveness” has a long and proud history going back at least to ancient Israel’s “jubilee” structure. You don’t have to believe in the Christian Lord to believe in mercy and forgiveness or in lifting the often crushing burden of individual and family debt:
If these are not the best ideas, others will be better. We will find them if we work from premises of debt forgiveness, for which the Lord's Prayer remains one of our foundational guides. Understanding it may require our going deeper than our modern translations to grasp its original intent.