(Please pardon this automatic machine transcription until we can edit in a better one)
Completed thanks to listener Pseudo_Mccoy. Thank you!
[0:00] I'm David Torcivia.
[0:02] I'm Daniel Forkner.
[0:04] And this is Ashes Ashes, a show about systemic issues, cracks in civilization, collapse of the environment, and if we're unlucky, the end of the world.
[0:13] But if we learn from all this maybe we can stop that. The world might be broken but it doesn't have to be. David I need to ask you something.
[0:24] Oh boy, here we go.
[0:25] Will you loan me some money.
[0:28] How much money are we talking.
[0:29] Well, I need you to agree first because it's a lot of money.
[0:34] You're getting me worried right here, Daniel. Like how much money are we talking?
[0:38] A million dollars.
[0:39] Daniel I don't have a million dollars to lone you, I'm sorry.
[0:42] $100,000? Why not David? Come on I'll pay you back.
[0:46] What do you need $100,000 for Daniel?
[0:48] Well this is what I didn't really want to get into, but I have this business idea and I haven't worked out all the business plan and the details but I'm feeling really good about it.
[0:58] I don't think you even have a business idea. This sounds suspect.
[1:01] Can't you just be like one of those mortgage lenders, David, that during the lead up to the financial crisis were just handing out loans like candy?
[1:08] What is that you're asking for? A ninja loan? Is that what they were called? No Income No Job. Sorry, Daniel. I'm not loaning you money.
[1:17] All right. This is a show about debt. Debt is something that we're all familiar with, and most of us intimately so. And yet defining what debt actually is can be tricky.
[1:31] It carries with it a ton of moral and practical contradictions. For example, many people insist that it is a moral necessity to pay one's debt. While at the same time we acknowledge that predatory lending is an evil practice. And you know David if we're talking about good and evil it may be appropriate to mention religion. Because not only do different religious faiths contradict each other but many contradict themselves when it comes to deciding if lenders are evil or delinquent borrowers are. St. Thomas Aquinas of the Catholic Church asserted in the 13th century that lending money with interest is unjust and sinful. But that borrowing money with interest is okay so long as the lender was already prepared to loan the money and you use it for a good purpose because turning another man's sin into something positive is good. And as David Graber points out in his book appropriately titled Debt in medieval France the Catholic Church often sent Friars into towns to preach against the evils of lending money with colorful sermons depicting the awful fate that awaited rich money lenders: illness, nightmares, and
[2:44] flesh eating demons. On the opposite spectrum you have religious authorities themselves participating in predatory lending such as Brahmins in the Himalayas who were discovered by an anthropologist in the 1970s actively enforcing permanent debt slavery among lower-caste people. And in some Hindu laws borrowers who default on their loans might find themselves reborn as a slave or beast of burden to their creditor. Buddhist monks have taught similar fates for both borrowers and lenders. And many business people in the Islamic faith have to get around rules that prohibit them from making interest on loans. I've actually worked with Islamic investors in the past who were trying to sell property as owner financed deals and because they could not charge interest we had to get attorneys to write some creative contracts to avoid any language that suggested money was being made in the form of interest.
[3:40] But we don't need to look to the Himalayas or the far reaches of the world to find the morality of lending in fact our media is chock-full of messages about how you always pay your debts. For Game of Thrones fans you're very familiar with the constant slogan, "a Lannister always pays their debts". And we find this running across our media. Stories of people who weren't paying someone back and caught bad karma because of it but eventually were able to redeem themselves by making sure that those that they'd taken money from eventually were repaid.
[4:10] Well it's funny you mention redemption, David, because when were talking about debt redemption is one of those words used in economic language and it comes from this religious background - sin, redemption - but we can get into the language in a little bit.
[4:24] That's right, Daniel, debt is complex and it's a concept that has evolved, transformed, and shifted over time. We're not going to be able to cover every single angle and historical context of debt but what we're going to try and do is to look at a handful of different perspectives to this concept and explore some of the roles it plays in our own lives.
[4:44] So in episode 11, "Designing deception", we talked about Edward Bernays and public relations in the need for corporations and investment bankers in the United States and other industrialized countries
[4:56] following World War II to convert our needs-based economies into ones of consumerism. And as part of that transformation was this emphasis on growing consumer debt, because in order to have an economy that's constantly growing and being fueled by consumerism you need your consumers to be taking on debt in order to fuel their purchases. And it's why we have shifted away from emphasizing savings, personal savings, to one of consumption. Because if our money is locked in bank accounts it's not being used. That capital is not being put to work fueling our economy. The only problem with this model though is that consumer debt always outpaces actual consumption. There are fundamental limits to how much you can squeeze out of a consumer base through debt. In fact, for every dollar that we add to gross domestic product here in the United States the overall debt-pool increases by $2. Which is why I today the average American household now has over 130% debt to income. And so because we're having trouble squeezing more and more out of our wealthy consumer base in our Western countries like the United States and Western Europe we've had to look to other sectors of the global economy to find new people to grow this debt.
[6:15] The economy must keep going as these rich consumer bases have become squeezed with that and their ability to consume has hit a wall that simply cannot keep going, the global economy has been on the search for new frontiers. We've seen a lot of this effort being carried out in poor in developing countries. Microlending was initiated in Bangladesh in the late 20th century and it quickly spread throughout the developing world as a means of connecting poor people with access to debt. And United Nations declared 2005 the international year of microcredit. In addition there have been recent efforts to force the integration of the developing world with financial markets as we saw in 2016 with the cashless India initiative, largely pushed by the United States Agency for International Development. All this to say the debt has become an integral part of our modern economy. It's something that we have all become familiar with but it wasn't always this way was it David?
[7:15] No, we think of dead today as something that's integrally related to money. I need some money. I need $100. I need $1,000. I need $100,000. So I go to someone. I borrow that money. And I'm going to pay them back more than I borrowed for the risk that I will never pay back the money and for the the interest of them sending it to me because you need to make a little bit of money loaning it to me and so we assume that debt and money are very closely linked that that's the way that it has always been. When you actually look back and look far back we find that this is not necessarily the case. So, Daniel you went to business school. You got an economic education.
[7:51] Tell me then before we had money, what was there?
[7:55] Well David there were a bunch of people kind of stumbling about. One person had a sack of grain. Their next door neighbor had a sack of sugar and they were trying to figure out how to
[8:06] conduct trade in a way where the person that has sugar can get some grain and that the person who has grain can get some sugar but how do we measure out what a gram of sugar is worth in terms of grain? And our other friend, he makes shoes and how do we measure out the value of his shoes in the sugar and grain equivalence? And it was very difficult, it was very awkward for people. Markets were very inefficient. But then one day someone invented money and all of a sudden things became so much easier because now we can measure the value of an object in this very standardized currency, this method of exchange. And so now the value of the shoe, the value of a gram of sugar,
[8:43] and a gram of grain could all be reduced a very simple measures. Trade flourished and everyone rejoiced as civilization expanded and expanded.
[8:52] Yeah that's the exact story I learned high school and then later on again in college, and that before there was money we had barter. But barter is difficult. Like you said, how do you convert a pile of grain to sugar to shoes? And thinking about the equivalence of all these trades, well, it becomes difficult. Two chickens for a wheelbarrow, the math doesn't add up. Money simplified this. It's saved us all this headache and it enabled modern transactions and commerce to occur.
[9:17] I want three chickens for my wheelbarrow because my wheelbarrows are amazing.
[9:21] Always reaching for more, Daniel. And this is the story told to us by economists. I've read it recently in pop psychology books. It's entered the mainstream conscious knowledge of our culture. We all know this is true, but actually, it's a lie. It might have started with Adam Smith with his writings trying to figure out where money came from. It was a guess. But apologists have actually looked back to see if there's any sort of evidence behind this and, in fact, no society in all of human history, including through today, has ever bartered three chickens for a wheelbarrow, two bags of rice for a bushel of grain, whatever. No society has ever been found to barter before the invention of money.
[10:02] Wait David how did I get my wheelbarrow then.
[10:05] Well Daniel they were a couple ways the first and most common way that was the standard for most of human history was if you needed something somebody just gave it to you, the so-called gift economy. You needed a wheelbarrow? Take this wheelbarrow. You need a chicken? Take this chicken. And yes, of course, some people did abuse the system, but there are plenty of stories of the glutton, the greedy person who took too much stuff, and then the people of the town got angry and killed them or kicked them out of town and it was this self reinforcing thing was you take what you need and when somebody else needed something you pass it on to them because you know at some point you'll need something and somebody will pass that on to you. And that was most of human history. But as society became more complicated, as we started trading among other groups we saw the development of credit. So, credit or as another way of looking at it, debt
[10:49] predated money actually.
[10:51] How can you have debt, David, without money though? Are you saying that if I'm borrowing two chickens from you and now I owe you five eggs over 15 years every two weeks...
[11:02] Let's not let's not mix up interest with credit. So right now you come up and you asked me for some bushels of grain. I have extra bushels so I give them to you, here take them, but in the future I know that in my head you owe me 2 bushels of grain and whenever you get a chance to get those grain whether by some other trading or or eventually you get your hands on them, you will give them back to me. Not with interest, not any extra, but just returning what you borrowed. This was the credit system. This was the debt system. So I'd keep either mental notes or physical notes of what you owe me and what they owe me and, in fact, sometimes these notes themselves would trade among people. Like, 'Oh, I have an I-Owe-You for two chickens, here you can have that and I'll take this from you and people would would pass these around. And what's nice about this is when you owe somebody something, that keeps a community strong. Because the people who owe you something aren't going to just disappear in the middle of the night. If they are, people aren't going to trade with them, and so they're there all the time, you know that you'll see your neighbor and that they'll always be there and eventually whenever they get what they need, what they owe you, you'll get it back. It fosters community, it fosters development among each other and a relationship among the people who are physically blood-related among each other. Gets communities strong which is something that we don't think of in terms of today. So, today this debt, this credit that we owe among each other is seen as something that tears apart communities. It causes poverty. But that's because our debt isn't usually to each other, but to these banks, to these credit card agencies that live among us threatening us and have created debt into something very different. But maybe I'm getting ahead of myself. So to peddle back then, what eventually led to the production of money for the first time? Wanna guess, Daniel?
[12:35] Someone discovered gold and figured out that they were rich, David.
[12:39] That's a nice story but, in fact, gold was traded at the time but usually just in raw ingot form. In a lot of places the first development of currency didn't have any sort of precious metals to it at all. They were stones, they were shells, they were different things. Some places used rods or sticks. And it wasn't necessarily linked directly to the precious metals that we think of when we think of ancient currency today.
[13:01] I think it's better instead to look at the need of why did we suddenly need money? And like most developments in human history the answer is primarily war. As you add the development of agriculture and along with that the creation of the first large, standing armies, whether they were volunteers or permanent forces, you needed a way to pay these soldiers because while they were engaged in combat and warfare they were unable to provide for themselves. They couldn't farm their fields, they couldn't do their crafts. So they needed a lively hood. And rulers needed to pay them so they had a way to take care of themselves. And that deed is what precipitated, in many places almost simultaneously the creation of...
[13:37] Well David, I want to stop you for a second because I actually think it's super interesting how the way introducing currency to fund a standing army percolated throughout civilization because it's not enough just to create a coin and say, "Here's some currency, this is what we're paying you," and expect a soldier to be satisfied with that unless they can get something for it, right? And how do you create a system of incentives where that soldier can actually use that currency for something valuable. It's kind of ingenious what you do is you print a bunch of currency, you pay your soldiers in this currency, and you don't pay it to anybody else. But then the peasants who live in your town, your city, whatever, in order for them to pay their taxes they have to offer up
[14:20] this currency to the government. So where are they going to get this currency then from, David, if all the currency is in the hands of soldiers but the peasants need to pay that currency as tax well, how are they going to get it?
[14:31] Well they either have to become soldiers or they need to please the soldiers in some way in order in order to have a commerce and exchange of that currency occur.
[14:41] That's exactly what happened is a soldier is hungry so the peasant says well I'll give you some of the food that I just grew but pay me some of your currency. And then that currency cycles back to the government and in this way currency provided this market system where soldiers who are part of the standing army who aren't functioning and other roles have a reason to be there.
[15:00] There's another couple points here to that I think really drive in the creation of currency how it really changed everything and one is that, those IOU credit systems that we talked about, well they don't work when somebody is traveling from town to town or in a soldier's place conquering from town to town, looting from town to town. You have to have some sort of money that works anywhere that people will accept anywhere and that is almost always a currency, is something precious that people will trade and find the same value no matter where you go and currency really enabled that. So, the spread of these civilizations, the spread of these groups of people, individuals, armies, trading groups, needed also at the same time the creation of currency and all these things went hand-to-hand and of course the final straw with it there is ancient war, well let me qualify that, I guess all war because it still happens today, involves soldiers looting places. And so when you conquer a town, a city, a country and you show up you can't loot IOU's, you can't capture credit systems.
[15:56] Especially if that credit system is, David, I'm going to give you three chickens because of that awesome wheelbarrow you made for me last week. That's not meaningful to someone who's looking to extract something valuable that they can take home with them.
[16:10] Exactly but the creation of currency, it allowed them very easily to directly steal that currency or the currencies based on precious metals, define artistic creations, jewelry, things that are beautiful art or ingots of raw material, take those, steal them melt them down, dissolve their history or any sort of thing that links them back to an individual that owned it and instead turn it into this soulless historyless piece of commerce that can be traded to anybody no questions asked, and enable that soldier to capture that value, that wealth from somewhere else and make it their own in a way that nobody can link back to the original crime of taking it in the first place. So you see at the same time the creation of currency also made it very easy to steal. It's much easier to steal and not get caught when its currency, where there's nothing linking it back to somebody. So we see the creation of crime explode at the same time that we see the creation of currency. Well, from the looting of these soldiers as well as the depersonalization of commerce and trade.
[17:06] I think this is such an important point about separating the human relationship of a favor or an obligation with that value itself. So we did
[17:17] touch a bit at the beginning of the show on some of the moral confusion that surrounds debt. Religious authorities, for example, have not arrived at a consensus on their feelings about the good and evil of debt and perhaps one of the reasons that is so confusing from a moral perspective is that by its very nature, it reduces human relationships to one of simple math, and in a way sacrifices humanity in the process. So trying to think about
[17:42] debt and its relationship to the human soul runs up against a pretty significant contradiction right from the start. If you came to me David and ask me for help. Let's say you asked for some money to get you out of a tight spot, would you consider it unreasonable if I did you the favor of giving you some money but then later I came to David I need you to pay me back the money I gave you and I know you don't have it right now but, you can raise enough money by selling your daughter into prostitution and I would really appreciate that.
[18:12] I'd say you're a real piece of shit Daniel.
[18:14] So, would you think that was unreasonable?
[18:16] Yeah I think that's unreasonable.
[18:18] Okay alright well let's say instead of asking me for a favor you asked me for a loan and I specify that I'll give you x amount of dollars to be paid back over 15 years at some specified interest rate. And we write this down into a carefully detailed contract. Well now as a lender of a well-defined loan I know exactly what you owe me and I can wash my hands of anything in moral that you may have to do in order to pay me back. It's not my problem. If you're in a difficult situation and the only way to pay me back is to sell your family member, I don't have to feel responsible for that because a deal is a deal. We have a contract. And this is complicated even further by the fact that I can sell this loan contract to a third party. And now the loan might be in the hands of someone who truly has no relationship to you at all which goes back to what you alluded to earlier about the system of that that we all are related to in our modern economy being mostly held in third-party banks and credit card companies that sell that debt. And the things that we have to go through as individuals in order to make sure that debt gets paid is now irrelevant to the cold hard mathematical facts of this business contract.
[19:29] That's a beautiful point. And that's a beautiful way to put it, Daniel, and I think really ties back to some of the things that we were just discussing with currency and why understanding where currency comes from, what we did before currency existed, is so important to understanding debt. Because the mention of being able to say that something is worth x dollars or x talons or whatever type of money it is you're using totally changed how everyone saw the world. No longer could you say like, "oh yes this person is just giving me a favor and I'll get him a favor back," but now you started to quantify everything. You started quantifying relationships. These things crept into our very language, into our religion, into the ways that we build our lives, structure our society, write our laws, and every single part of our world has been quantified and calculated in order to apply this overall accounting and math to make sure that we're always being profitable, always making money off something, always analyzing even our relationships based on "is this person profiting me? Or are they helping me or am I getting something out of this, am I putting more in than I'm getting out?" And this devil's math has taken over every single part of our lives and our world.
[20:34] Well, David, I think we should shift gears a little bit here to some modern examples to talk about this debt problem because obviously when we're talking about the history of currency and the relationships that ancient civilization had with credit, things can get complicated and I'm not a historian certainly not an anthropologist so why don't we just look at a couple modern examples to try to wrap her mind how this debt has kind of perverted our relationships with each other and with the world around us. And in our modern world debt derives an insidious power, in part, from the fact that we've been trained to believe that economics is a field of science, a field of objective analysis that is divorced from political ideology, and therefore policies dealing with questions of economic reform are framed in terms of their objective contribution to economic growth and other economic metrics. And what that means is that we tend not to group issues like the ability for women to vote in the same category as issues related to interest rates and trade. The way it's presented to us the ability for women to vote is a human rights issue, and questions of wealth and money for economist and smart people to sort out with equations. Ultimately, what that means is that as long as people enjoy political equality on paper any suffering or discrimination they faced in reality can simply be ignored.
[21:56] Let's look at a practical example. On the 26th of May, 1948 the National Party won the South African general election and immediately begin implementing a program aimed at systematically stripping the majority black population of political rights and land in order to maintain and extend political and economic power for this white minority. Marriages between Europeans and non-Europeans were prohibited. Race was used to determine economic and educational opportunities and laws like the Group Areas Act directly excluded non-whites from certain parts of the country. Economically, South Africa's rich natural resources were kept in the small private industry's hands and the National Party expanded policies that excluded non-whites from any share of this natural wealth. This repression and exploitation sparked a reaction among the people, and in 1955 the African National Congress dispatched 50,000 volunteers to record demands for the majority non-white populations. These demands became the official agency platform in what would be known as the Freedom Charter.
[22:59] The Freedom Charter which Nelson Mandela called an inspiration to the people of South Africa famously begins with the words, "The people shall govern". And it called for
[23:10] equality under the law, the right for all people to vote and an end to discrimination and exclusion. But it also contains the number of economic demand as well including the nationalization of the country's mines and banks, and the redistribution of land to the people themselves. Because for Nelson Mandela and the people for whom the charter represented freedom for South Africans meant not just political equality. It meant wealth and land redistribution from those who stole it back to the people. Mandela was imprisoned in the 60s for these radical views and commitment to fulfilling the promises of this Freedom Charter. But amidst rising international pressure and a changing political climate in 1990 Nelson Mandela was released from prison in an attempt to ease this mounting international pressure calls for an end to apartheid and to prevent the outbreak of civil war. Leading up to the 1994 general election in which Mandela's party, the ANC, would ultimately win. Mandela went into negotiations with the National Party to iron out details and concessions for peaceful transition of power. The National Party had 45 years of white supremacist power and military might under its belt but Mandela had the support of a mass movement.
[24:29] The National Party goal was to maintain control of the country in the hands of the small white minority while Mandela's goal was to fulfill the promises of the Freedom Charter - political equality for all, nationalization of the country's resources, land for the people and much more. To make a very long story short, the negotiations were split up among two different tracks. The political and the economic. When it became clear that Mandela was going to win the political battle the National Party poured its efforts into the economic negotiations in concert with international groups like the IMF, the World Bank, and other foreign investors. They firmly established South Africa Center for economic power in the hands of the small business elite and out of reach for Mandela and his party.
[25:13] Two significant concessions made prior to this transition of power were allowing the central bank to be independently lead outside government control by an apartheid era director and the acceptance of a $850 million loan from the IMF with punishing strings attached. Things like lower import tariffs, limits and cuts to wages for public sector workers, and general reductions in state spending. So, although Mandela and his party took control of the country politically, because of the economic concessions that were made and the crushing debt that was taken on, he was effectively stripped of any
[25:50] practical power to fulfill the promises of the Freedom Charter and the reason that the people elected him in the first place. You want to raise wages for public sector workers? Well, you can't because the IMF loan that was taken on restricts any increase in wages across the board. You want to provide free water for the people? This would violate World Bank private partnership deals. What about monetary easing? Printing money? Well the central bank is under opposition rule and tried proposing that to him. You want to provide free AIDS medicine to people who desperately need it? Well, you can't do that either because that would violate intellectual property rights and embedded in World Trade Organization stipulations that come along with membership that occurred during the economic negotiations.
[26:37] But the most insulting and offensive reality of post apartheid South Africa was the debt that they were forced to pay. Apartheid systematically stripped the natural wealth of the country from the people into the hands of a small elite, and that's why the Freedom Charter's core goals included nationalization of this wealth that was stolen. But once in power the ANC was forced to sell off state-owned resources just to pay its debt. $4 billion was raised between 1997 and 2004 by selling state assets, half of which went to debt payments. And annually, 40% of South Africa's debt surface goes to lifelong pensions for apartheid-era government workers even those who fled their posts during the political upheaval. In the
[27:20] first 10 years following the ANC's victory and the official end to apartheid 1 million people were evicted from their farms 1 million people were disconnected from water and unemployment for black South Africans doubled.
[27:33] The land that was supposed to be redistributed to the people continues to be majority held by the minority white elite who stole this land during this apartheid-era rise to power. And today South Africa suffers from one of the worst states of inequality anywhere in the world.
[27:54] So, Daniel, that's a long story and there's a lot of details there but what can we take away from this in terms of lessons about debt.
[28:00] Well, David, I think one of the things we can take away from this is that debt on the national level effects effects the people within the country and often times it equals suffering for these people. So we talked about in our episode "Fashion Victims" how manufacturers of clothing pit vulnerable countries against one another by forcing governments
[28:22] to enable human right abuse so that factories can produce cheap clothing and add to that country's bottom line in terms of exports and trade revenue. And in the same way, the loan that South Africa was forced to take on and the foreign markets that opened itself up to as part of this economic reform created vulnerabilities that simply wasn't possible for Mandela's political party to achieve its goals. Because of this exposure to foreign markets if you offend free-market principles by doing something like provide affordable food for the poor, well financial traders halfway around the world can short your currency or commodity stocks, depressing your National economy, and ironically forcing you to take on additional loans which, of course, comes with even more strings attached like stop feeding the poor.
[29:09] What's really interesting about this is that that debt that we talked about early before there was any sort of currency was about building community, about keeping people together dependent upon each other making sure they look out for each other so they eventually get the things they give to each other back or in some different way. But now debt has been turned into this weapon, almost a tool to get other nations to get other groups of people to do exactly what you want even when you lack the political power. And that's the classic negotiation mistake that the ANC made in this transition from this apartheid state to their modern South African political system where they focus so much on the politics of who is in charge of the government looks like that they failed to realize the real source of power in any nation is the economic center, is who owns the capital who owns natural wealth who owns the debt.
[29:57] And that's why these groups, the IMF the World Bank and the private citizens holding these large sources of wealth are able still to exploit this nation to get them to do exactly what they want even though they lack the political control. Debt has become something that used to tie us together and is now ripping us apart.
[30:15] But David it raises the question how did we arrive at a world in which a country like South Africa can fight for 40 years alongside Global support to end discrimination and institutional repression finally celebrate political victory and then wind up as a country with even greater
[30:34] inequality than before? How is that possible? And maybe it goes back a little bit to our episode "Designing Deception" in which we cover some of the corporate propaganda that has helped shape our world. And that's that we have been led to believe in the assumption that economic growth is a fundamental good that everyone benefits from. It is this assumption upon which the foundations of consumerism, debt, and exploitation rest. And it's what has allowed the separation of economics from political consideration and the disastrous consequences for countries like South Africa. As long as we believe the economic growth is an inherently virtuous goal we will be willing to tolerate. The pursuit of that goal by any means necessary. And the fallout that occurs - the violence, the terrorism, the poverty - these things can be blamed on other factors like politics or individual failures
[31:27] or whatever the relevant scapegoat of the day happens to be.
[31:31] So let's look at generally how economic growth is pursued around the world through the guise of International Development. International Development
[31:38] This field is framed in terms of ending poverty around the world by lifting those in developing countries to higher qualities of life through economic growth the most notable organizations involved in this war include the members supported international groups, the World Bank, International Monetary Fund, the World Trade Organization, and the Asian Development Bank. In addition, individual countries often fund their own development organizations like the United States Agency for International Development or USAID.
[32:06] So what is the mission of these international organizations? If you look at their mission statements the IMF says, "We are working to foster global monetary cooperation, secure financial stability,
[32:18] facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world." The World Bank, it's goal is to provide "Financial and technical assistance to developing countries around the world in an effort to reduce poverty and support development." And the World Trade Organization, "The only global international organization dealing with the rules of trade between nations." And there been a number of people with experience working with these organizations who have come out against them because although all these organizations have the common declaration that ending poverty around the world is their mission. This ostensible goal falls apart when you examine real world impacts. In his book Confessions of an Economic Hit Man John Perkins tells his story of consulting for organizations like the World Bank to implement economic growth policies around the world in a process that was all made possible with predatory lending.
[33:19] It goes something like this. A consultant hired by a development organization goes into a country with a team of mathematicians, financiers, and statisticians. Together they come up with the report that shows how a particular project like a hydroelectric dam can generate economic returns. These returns of course are skewed in favor of the business owners that stand to benefit from the project, like the owners of a hotel chain in the local politician that signs off on the project. In order to afford this program the country in which it will be built need to take on a significant loan which comes, of course, with strings attached like the ones we saw on South Africa. And always as part of these deal structures is a requirement that these projects are built not by locals but by foreign companies and contractors which means that the United States is spearheading this project, for example, the money lent out never even leaves the United States. It goes straight from the bank to the engineering firm. Meanwhile that loan that the nation took out, well the interest for that is being paid out of that developing country's national budget.
[34:22] And Perkins describes how the goal was often to get a country to agree to a debt it could not repay. And typically when we think of loans and the context of a bank loaning you money to purchase a home for instance a standard assumption is that the bank isn't going to loan you money you can't repay. It doesn't benefit them in any way but in this development context that is the goal. Because the vulnerability a country experiences from being on the brink of default opens up the possibility for even more exploitation. Agents of the IMF for some obscure consulting company well they come in and they demand concessions. Oh you can't pay your debt? We'll give you some relief but you need to allow the United States to build military bases on your land. Oh you're having trouble servicing your loan? Well give us votes at the next United Nations assembly or sell us oil at a discount price or privatize your health care system so we can import our own contractors and funnel more money to the mainland. And and in 1988 a senior economist at the International Monetary Fund sent a 150-page resignation letter to the managing director in which he describes his work manipulating statistics and economic models to make Latin American countries appear worse off than they really were so the IMF could justify imposing economic reform policies like the ones we've discussed. And, David, I think we should read the first paragraph of this
[35:49] 150 page letter.
The Blood Runs In Rivers
Today I resigned from the staff of the International Monetary Fund after over 12 years, and after 1000 days of official fund work in the field, hawking your medicine and your bag of tricks to governments and to peoples in Latin America and the Caribbean and Africa. To me, resignation is a priceless liberation, for with it I have taken the first big step to that place where I may hope to wash my hands of what in my mind's eye is the blood of millions of poor and starving peoples. Mr. Camdessus, the blood is so much, you know, it runs in rivers. It dries up too; it cakes all over me; sometimes I feel that there is not enough soap in the whole world to cleanse me from the things that I did do in your name and in the name of your predecessors, and under your official seal.
[36:43] When we separate the economics of this debt from the human cost and we turn everything into these quantifiable metrics, the subjective and technical science, we lose sight of the fact that behind these loans
[36:59] is blood. But David it makes sense why a aggressive country would want to saddle a poor country with debt that they cannot pay. It's clear why they would want to do this it allows them to exploit them to a greater degree. But the question is why would this country take on debt that it cannot pay?
[37:18] Why would it agree to terms that ultimately are going to harm its economy.
[37:23] Well, as we saw with South Africa it's not the people, these countries, who agree to these deals but individual politicians who are pressured by number of factors including bribery, threat of assassination, or as we saw in the case of Nelson Mandela by simply being out negotiated. And so you wind up with a situation where an individual politician can place an entire country in debt, enrich themselves, sell the resources of the country to foreign owners, and then escape the country leaving the people themselves on the hook for this debt that they can't possibly ever pay. If you read Perkins' book he describes situations in which presidents and other political leaders were assassinated when they did not agree to the terms of these organizations and how these murders act as precedents for other leaders around the world.
[38:11] Well David if we're speaking about murder maybe we can focus for a second on the violence that always attends these loans. It's no coincidence that in order to implement these policies that promote economic growth you have to, in a way break, down democracy itself. It's no coincidence that these policies lead to unquenchable violence and the need for heavy military presences around the world. Many countries in the global south have vibrant histories of political violence and debt.
Violence And Economics
[38:39] In 1973 the United States helped to violently overthrow the democratically elected President of Chile and it supported the consolidation of power in the hands of the tyrant army chief Augusto Pinochet who then expanded military power to kidnap, torture and murder anyone
[38:59] who had supported the former president. And all the while he was consulted by economists like Milton Freedman from the United States on how to implement new economic reform policies for growth. It goes without saying but the money that Pinochet spent on military equipment which he then used to murder his own people, well who do you think paid for that equipment in the form of debt? It was the Chilean people themselves the very people who are being systematically rounded up and murdered.
[39:28] But it should come as no surprise that democracy must be sacrificed in order to implement the type of policies that benefit international trade and foreign investment. Daniel if you're labor in a Chilean mine would you vote for policies that allow the very gold that you mine to be sent halfway around the world to a company in a foreign country who can then sell that gold for any price they want on any market they choose and none of that revenue or profit goes back to you or your own country? Would you vote for policies and allow that same company to own land you were born and raised on, the land that your ancestors lived on? Would you vote for policies that allowed that company to pay you less than the living wage and conditions that are unsafe and dangerous? I think not. But maybe you would accept those same policies if you alternative was death.
[40:18] Well, David, I got to say you drive a hard bargain there and I would negotiate but you don't seem like the type of man who's in the position to negotiate with me.
[40:28] Yeah Daniel that's right you wouldn't willingly accept these policies. I mean nobody would. But at the same time if I'm the United States I can't just invade every poor country with tanks and armies in order to make these policies happen. I can do that every now and then but its overall it's just too impractical with the world. There's 180-something countries, it's too much.
[40:46] Not to mention the political fall back.
[40:48] Doing something like that.
[40:50] Exactly, we can't just be invading constantly, only every couple of years. But that allows you to do that same thing more or less but in disguise. First, you use economic pressures to force a country into borrowing money that it can't afford. Then, you dangle some form of financial assistance at them with strings attached, strings that involve giving up natural resources or cutting social services or opening their agriculture to foreign commodity markets.
[41:17] And all of this I'm assuming is framed in terms of financial liberation.
[41:22] Words like freedom, democracy, open markets, as these policies get forced on to the people increasing poverty that people will naturally resist in any way they can. But because these economic policies have been divorced from political tools that people have no way to legally stop this grand theft of national wealth.
[41:43] Like we saw in South Africa, David, I mean the central bank as part of that economic negotiation, that transition of power. The ANC agreed to allow the central bank to be independent of the government whatsoever so, from the people's perspective it doesn't matter who you vote into office it doesn't matter what legislation you try to push through Parliament or Congress or whatever governing body you have. You've already agreed to allow this economic Center to be divorced from these political considerations and there is no way to vote on changing that.
[42:16] And that's right. That means the only other option is violence, to revolt in things like guerrilla warfare against these corporate interests taking your land, your food, and your security. Well, now theses foreign bodies have all the pretext they need to sell the local politicians weapons, or sending the tanks themselves while the newspapers back home praise their willingness to take risks quilling these local bandits to secure the freedom of the people and the security of this newly liberated economy.
[42:44] Well put, David. But you know this modern system of debt that's backed by the threat of violence for the purpose of subjugating other nations? Well, it only differs from earlier methods in its use of misdirection and political trickery. Haiti Independence Debt
[42:58] Let's take a look real quick, David, at one of the most ridiculous somewhat modern examples of using debt to subjugate a disadvantaged country. And we find that in Haiti. And this is so ridiculous, David, it's actually I mean I don't want to say it's comical I just I don't know how to describe how ridiculous this is.
[43:20] Okay Daniel let's see let's see let's see what's so funny.
[43:22] In 2003, president of Haiti Jean Bertrand Aristide asked France to pay Haiti $21 billion in reparations for a debt that France forced Haiti to pay in exchange for Independence. Let's look at the history of this debt for just one second. So Haiti had been a French Colony for over 175 years. Half a million slaves labored in sugarcane plantations and France profited by selling the crop in foreign commodities markets. Well, in 1791 these slaves revolted. Napoleon sent an army of troops to put down the Rebellion but he failed. Some 50,000 French soldiers were defeated by the former slaves who took control of the country and declared independence in 1804.
[44:12] This is one of the most important revolutions that we saw, in the entire world in all of modern history really. It eclipsed, in terms of significance, the United States and it led to a lot of revolutions that triggered around Central South America, the Caribbean over the next coming decades. This was the first time slaves had finally overthrown their masters and took control of themselves, and that is really a turning point in history in the fight against slavery that will continue for at least another hundred years.
[44:39] And as you would expect France was not completely satisfied with this new arrangement. And an 1825, just over 20 years later, a fleet of armored warships showed up on Haiti's doorsteps and demanded that Haiti pay France 150 million gold Francs to repay France for the loss of revenue, and to repay plantation owners for the loss of their property. Property
[45:04] being these independent former slaves themselves.
[45:08] What's incredible about this is that this loan was quite literally agreed to at gunpoint.
[45:14] Not literally gunpoint, David, cannon point. Come on these are warships.
[45:18] Yeah, that true and there's no way for this country to afford this debt without like straight up starving itself. That hundred fifty million gold franc sum that France demanded was five times greater than Haiti's annual revenue from all their exports. And in addition to this figure France, the United States, and other countries placed embargoes on Haiti until the debt could be paid, which ensured that Haiti would forever remain an impoverished country. It's like somebody saying you owe me $100,000, you make $20,000 a year, you need to pay me back immediately. Also you're not allowed to work anymore.
[45:50] No it's even worse than that, David. It's as if if you came and you broke into my house and made me cook your food for you and I didn't like that so I forced you out of my house. And then you turn around and charge me that $100,000 as reparations for the for fact that I kicked you out of my house. I don't
[46:09] even know how to explain it David.
[46:10] You kicked me out of your house?
[46:13] I kicked you out of your house.
[46:14] Who's who in this scenario?
[46:18] See that's what I'm saying, David. It's just so ridiculous you can't...
[46:21] No it's like it I have a house. I'm Haiti. I'm the Haitian people. You break into my house. You make me cook food for you. You make me sleep in the basement. You define the house as your own. I say, "You know what? This is my house. I bought this house. I live here. I was here first," you know like, "I'm not doing this." So I kick you out of my house just like any normal person would. And then you come back with a bunch of guns and you point them at me and you say, "You can't kick me out of your house that you own because I own it because I live there, or something, and so you need to pay me for the house that you own and I've always owned but you need to pay me $100,000 to buy your house back from yourself or else I'll kill you."
[46:59] "And also you only make $20,000 a year and you're not allowed to work anymore or leave this house because I'll kill you if you do that, too."
[47:05] Exactly, David.
[47:06] It's crazy I mean this is this is crazy.
[47:10] Well, you know what? Haiti kept up as best as it could with the payments. I've even read that there were National songs that many Haitians would participate in about how we need to all come together and help the government pay this loan and even though we don't have much we need to work hard and do everything we can, we as citizens will pull money out of our own pocket to help pay this loan. And over several decades the gold was eventually paid and France formally acknowledge full payment in 1893. So, is that the end of the story David?
[47:41] I wish it was but you're going to tell me there's more.
[47:44] Well of course they would because what is the show about us about debt and if there's one thing we all fundamentally understand about debt is that it's never just about the principle borrowed but the interest that accrues. Haiti continued to pay off interest associated with this independence debt up to 1947, 122 years later. And to make another long story short, this was the date that President Aristide asked France to pay back in 2003 France said no. And one year later the United States and French governments allegedly back to coup d’état that ousted the democratically elected president and replaced him with someone a little bit more reasonable in their perspective.
[48:28] I just want to point out the hypocrisy of France right here this nation that is always seeing itself as the forefront of fairness, of a quality of being the good in the forces of the world, and I mean this was all happening during the same time France was having their own Revolution their own time where they overthrew everything and said, "Look we have to look at a better way," and they still charged Haiti for their freedom still made them pay for their own Revolution. And now when France, a nation that has plenty of money, in order to help out other nations is asked to repay the money that they stole from the Haitians, they say no. And I think it really illustrates that most of the social good that Nations report to do is based on appearances on looks and not any actual sort of performative actions because when it comes down to money, paying someone back and it in this example quite literally, there's a dollar amount attached to this. It's not like reparations for where we have to calculate suffering or something. They're just asking to have the money that they paid back for their freedom returned to them. And France has denied this request, at the same time talking about how much investment Haiti needs in order to be able to claw its way back from one of the poorest nations in the world, largely because of this debt that its spent the last 120 years paying off. It's ridiculous.
[49:42] Yeah but I think you hit the nail on the head when you said it's about maintaining appearances rather than actually doing good because when you look at how this debt is used as a weapon like you mentioned around the world, it's used to maintain imperial agendas. And you mentioned how important this revolution
[49:59] Was and sparked a number of other slave revolts and I think this really gets at the heart of the issue of why Haiti was punished so severely, you know why did the United States back France at this time? Why did other countries rally in support of France in placing Haiti under these embargoes? And why do we refuse to offer Haiti any reparations to this day? You have to think about the implications and the historical context of Haiti's independence. This is a slave colony that revolted against its colonial masters being led by former black slaves. I imagine that first and foremost in the minds of every imperial leader at that time is the precedent that would set
[50:40] for slaves all over the world if allowed to go unpunished. And if France agreed to pay Haiti reparations today, well you're right David, it's a extremely small sum coming out of the wealth of France but the very act of acknowledging the need for reparations could set a precedent the likes of which the United States, Great Britain, France, Spain and many other wealthy countries that have built their economies on the backs of slaves simply wouldn't be able to afford.
[51:09] Once again Daniel, what's that line? Nothing is profitable.
[51:13] That's right. If we actually had to pay back all the wealth that was stolen, well we wouldn't have any wealth left would we? Because it's all stolen, David.
[51:23] Okay so we got a lot of long examples here about nations being controlled or destroyed by debts levied by other nations or international funds, Debt At The Individual Level
[51:32] but for most of us debt isn't something that happens at a national scale. We're all aware of this with the national debt, these numbers that happen. But our personal experience with debt is something much more, well, personal. So, sure we have our credit card debt, we have our home mortgages, but there's a lot more nefarious debt that exist out there that just like these national-level loans used to enforce certain policies or actions among nations where they sell military might to enforce it. Well, the same thing occurs at the individual level, things like fines and debts are levied in order to get us to behave in certain ways and to threaten us in order to act within societal norms or wants because the alternative is being in debt. Of being threatened by being locked up, levied with more fines and debt or to have our economic security damaged. So, we talked in the past about how fines and debts can be levied by courts in order to control people and oftentimes the most vulnerable among Us, and use them almost like a source of profit, a way to fund police and local governments that you can constantly squeeze and they can't fight back because they don't have the resources to hire the appropriate attorneys and find themselves often times levied in debts that incur more debts because of the fact that there's debts on them that they cannot repay. Or, alternatively, if there are things like repairing vehicles or houses or clearing stuff out they can't afford the fixes
[52:55] that created these debts in the first place and get more debts constantly levied on them, ending them up in a sort of permanent debt servitude to the state. That while we can't lock them up at least not explicitly for the debt the failure to repay these debts can end them in jail, and at the very least as a source for more income for these law enforcement agencies and local municipalities.
[53:15] I think this is actually a good opportunity to start talking about some of the moral contradictions that we find when we start looking at debt and one of these moral contradictions is Moral Contradiction: Who Has To Pay?
[53:24] on the one hand we say, you know, "We all pay our debts. We must pay our debts. And it's morally right to pay our debts," but when you start looking at it really depends on who you are and there's this contradiction in our systems of credit in terms of who ultimately has to pay these debts. And an episode 23, "The Best of Times" we describe that system of debtors prison that is being illegally enforced in jurisdictions all over the United States with people being threatened and put in jail for as little as $10. And the ACLU wrote a report on the subject and we need to highlight the ways that different people within the system are treated. Let's highlight this big contradiction that goes on so on the one hand we had this case that happened in Indiana in which a man was harassed by a judge to pay a debt that a landlord claimed he owed from eight years ago. David, let's read this really short excerpt from the court records to see what was said. You'll be Mr. Button, the man that was harassed, and I'll be the judge, Okay?
[54:26] Playing in to your power fantasies. I got it. Let's go.
[54:30] I'm a big bad judge, David, watch out.
[54:35] We are here today for you to explain what you're going to do to pay this off.
[54:40] I can't.
[54:41] Okay, but you're going to.
[54:43] I can't do it.
[54:45] Okay Mr. button...
[54:47] Yes ma'am.
[54:48] Oh, I didn't know I was a woman.
For some reason we're not communicating Mr. Button, all right? You're not hearing me for some reason. I am telling you that yes you will. You are going to tell me how you're going to go about doing that. And I'm not going to accept, "I cannot," and if the next words out of your mouth are "I cannot," Mr. Button, then you'll sit with Mr. Glenn at the sheriff's department until you find a way that yes you can. So what kind of payment can you make the pay this down.
[55:16] $5 a month.
[55:21] $5 a month! I'm going to be an old woman before this is ever paid off.
[55:25] That's what I can afford ma'am. I live on Social Security Disability. I've got to pay my rent and my lights and my gas.
[55:33] I'm going to order you pay $25 a month until this is paid off.
Alright, so that was an excerpt from this courtroom drama that that occurred for Mr. Button let's contrast this with another company that was involved in this debtors prison system.
[55:51] Debt collection Broadway Global Master Incorporated dressed its employees up in fake police uniforms with fake badges to intimidate people into paying money they didn't even owe. The FTC sued this company in order to pay a $4.3 million fine but the FTC will they suspended the fine at $600,000 because of the company's "inability to pay".
[56:15] What's interesting about this is something I want to address as we come towards the tail end of the show. The idea that what we owe oftentimes, well, it's just made up. These numbers, like, they're based on things because we loan somebody money or at this point because you've levied a fine on someone and they're in debt but ultimately debts aren't real things. They're imaginary concepts that we've made up in order to keep people accountable and try to quantify our world. And in this case when that's inconvenient to a judge or in this case this company, well, those numbers can be modified because once again they're not real they're not based on anything. What separates the fact that this company that actively harmed people, that impersonated police officers, something you think people in the judicial system would be upset about, gets a huge break almost 4 million dollars saved even though they've been actively harming people stealing money from people who didn't even owe it. Why do they get something off when a man who can't afford to survive has fines levied against him by a court system. And I think the answer is because of power, because of violence. That only works when it's backed up by a form of violence. We all know the stereotype of a loan shark. You owe money, gambling debts, whatever, and they call and threaten you.
[57:23] Here comes the baseball bat.
[57:24] Yeah exactly, and when you can't pay goodbye kneecaps. They break them. It's a stereotype that we know well but it's based on reality. The violence makes people pay. Well if we remove the thuggery out of it regular loans and debt also are backed up of violence. If you don't pay you end up in one of these courtrooms, called before judge in order to pay somebody back with the weight of whatever country's law enforcement standing behind the person that you owe money to threatening you that if you do not repay this person, sometimes a process that can take the rest of your life, with money that you often don't have pulled out of your very ability to survive, well then you can end up owing even more money to both this individual and the courts in the forms of fines or if you're unlucky you can end up in prison itself. On a larger scale when we owe things to credit card companies, to banks, they charge more money as we owe them more money and the amount that we owe gets increasingly large. They can take this debt, sell it, and we end up in the court system again or we can have our very income itself garnished and we spend the rest of our lives repaying people because we were in their eyes too risky. And the threat of violence is the only thing that makes this debt real. Because if we eliminated that fact, the fact that if we don't repay somebody then we get in trouble, that we get locked up, that we get our kneecaps broken. Well, then the debt disappears. Because if we can't repay it, we're not going to repay it. Because when we have no ties to those people that we owe debt to, when we don't have those community connections with those IOU’s what motivation do we have to repay them besides the fact that if we don't we face that violence?
[58:54] And this imaginary thing that we've created that controls almost every aspect of our lives, that ruins the lives of individuals and controls the fate of nations is nothing more than something we've made up and written down on a piece of paper because we've quantified everything and calculated how much money we can pull out before we break people, before we brake systems. That is the interest rate that we charge on every single aspect of our life that we can.
[59:16] And this debt that has been so divorced from these human considerations has really warped our sense of right and wrong because this Moral Contradiction: Industrious Poor
[59:25] consumer economy that we talked about that has to expand credit to stay alive, well, in order to support that it becomes necessary to confirm our values and our sense of morality to the system of debt in the way that our values have become reduced to a system of mathematical quantities and these business deals. It really has warped the type of people that we value as a society. Consider that micro lending and micro-finance which is this practice of establishing lines of credit to people in developing countries of small means is seen as a way to reduce poverty around the world and the argument of course is that providing the industrious and entrepreneurial poor with debt allows them to leverage their skills, their talents, and hard work with capital to build businesses and escape poverty. And perhaps this
[1:00:17] seems reasonable on the face of it but when looked at closer we find a troubling implication. If only those industrious and entrepreneurial individuals capable of turning money into more money are worthy of a better life it means everyone else is unworthy. This is what happens when we reduce every person to a number and every object and place to commodities, they're disconnected from their histories and meaning, is only those who can turn money into more money are worth
[1:00:48] anything. And I think we should question that.
[1:00:52] And Daniel maybe we should question interest itself. So, why do we charge interest in the first place? Well, it's to make up for the risk that a lone will never be repaid. At least that's the original intention. I know there are various ideas of what is fair interest, of what's usury and what's not. Those laws have been eliminated the United States by the way. And the religious guidance on usury has also been, for the most part, ignored or eliminated, paving the way to our 25% APR credit cards and payday loans that charge 30% interest or more, trying to ignore the suffering that they impose on people's lives in order to extract as much money as possible and making a fortune off of it in the process. But let's take a look for just one moment at student loans and this is really its own episode as well as the whole conversation of what goes into the academic industrial complex at least from the business perspective. Academics and the research that occurs there is its own conversation but, student loans, yes lots of us have them it's a huge amount of economy, there's over a trillion dollars in student loans and is starting to cause a drag on the economy itself. Millennials, Generation-Xers, aren't advancing in their lives and not purchasing houses, they're not getting married, they're not having children in large part because they are saddled in debt. Much of that debt, of course is, student loans and most of those student loans are federal loans, things given out by the government so people can go to college. And yet the government charges interest on these loans. These loans which by the way cannot be discharged in bankruptcy proceedings. There are a couple ways that you can discharge this debt with public service and working at government jobs for a large portions of your professional life.
[1:02:27] But those are impractical to the vast majority of individuals and a increasingly limited option as those programs gets slashed as the government tightens its fiscal belt. But why in the first place are we charging interest on these loans at all? Remember second ago I just mentioned that the reason we charged interest is because of that risk that somebody won't be able to pay back a loan but these loans are federally guaranteed. You can't discharge my bankruptcy even if you have no more money to pay you can't escape it you're going to be paying these for the rest of your life so what risk is there? Why does the government charge any interest on these at all? Further, wouldn't the federal government want as many people to be in education as possible to further that economy? To increase that constant growth that's needed for the world to survive? An educated populace is a more productive populous. And the idea that we need to charge people in order to be more productive in the form of interest is crazy. When you start thinking about that like this questioning why there's debt in the first place then you start seeing lots of cracks in the system. Things stop making sense when you realize that so much of the world is designed just to extract as much profit as possible or to lock us in these debt servitudes in order to get us just like South Africa to behave and act in certain ways. These student loans end up not being loans in order for the government to profit, although that does happen, but they're actually designed more so to ensure that we're working and remain employed because that's what the government needs, a stable populous that is constantly having to work in order to pay off these debts in order to survive because the other option of trying to step out of the system, well, then at that point
[1:04:01] you're faced with violence of the system that enforces these loans in the first place.
[1:04:05] Ultimately, David, I mean this was a show about debt. And as you would expect as long as we're talking about some economic or financial concept there were numbers involved but it really wasn't the focus, right? I mean what we wanted the show to be as more of a conversation about this concept of debt and how it may be used in a way that defies the conventional wisdom of what debt is and what its purpose really is in the economy and in our world in our lives. And we wanted to have this conversation so that we can all be thinking about how this concept plays out in our daily lives and what our relationship to it should be. And also we want to bring awareness to just how much it has invaded every part of our lives to the point that it has, you know, the very language we use is framed in terms of debt. We often talk about what someone owes us or what we owe to society. Or what we owe to our family, our friends. And in general, just the way we talk about life in a lot of ways has been turned into terms of the
[1:05:11] business deal.
[1:05:12] In a relationship you hear words like they put in the work or I get more out of it than that they put in it and even like around the house we think about chores like oh I washed the dishes this time so now it's your turn to wash the dishes and we build these mental debt notes in our head even though that there's no interest on it or monetary value because we can't assign a value, hopefully not, of what it cost to wash the dishes we still keep track. We tally. And if somebody doesn't do something more you get pissed off at that person. And I want to offer a alternative solution. Yes, you know if you have somebody who isn't doing the things that they should maybe try talking to them instead of letting it build up in some passive aggressive list of debts in your head. But at the same time maybe an easier way to do it is to shift your perspective on the world and try and stop calculating everything in terms of debts people owe you and that you owe to others. If you give a gift, give a gift and don't expect anything back. Give a gift because you want to because giving a gift feels nice. It's nice to see people happy that's all you need for a minute. If you see something that needs to be done just do it. If you're the first person to see it, fix it. If we could all do this we would eliminate so much strife among ourselves among our relationships and it's something that I found very successful in my own personal relationships. When you need to do something, do it.
[1:06:29] And ultimately realizing that for whatever evil comes from debt comes from the fact that it has been separated from this human relationship. That those IOUs that you talked about, David, and ancient society that were built on actual relationships, well, the ability to take a debt and clearly define in economic terms what someone owes and in what those terms are and separate out the need for that human relationship, that's where the evil comes from. And thinking in those ways in our everyday life, I think the closer we can get to a more authentically human relationship with the people and the world that is around us.
[1:07:08] So we've been talking a lot about thinking about what debt is instead of actually a conversation of the effects debt has on our economy or the global financial crisis that is invariably coming and it's going to be fueled mostly by these massive debts we carry, but instead debt as a concept, how we think about the world, how we think about each other like Daniel just mentioned. But I also want to introduce a new concept and we briefly touched on this where that debt I mean most of it is imaginary.
[1:07:33] If it disappeared no one is hurt and in fact through most of human history that's how debt has been treated so let me introduce you to a term "jubilee" so in the past, in the ancient past, debt had gotten out of control. People were enslaved. Lands had liens placed on it and the people of the world were miserable. Couched in debt they were unable to be economically free. And without economic freedom, well, as we've found and the people of South Africa certainly did, you can't have political freedom either. Enter a ruler, King Enmetena, the first recorded forgiveness of debt on
[1:08:09] a nationwide scale occurred 4400 years ago in a small nation called Lagash. There the king, he came to power and the people are miserable underneath him and he issued a proclamation that all debts were to be forgiven. And this is actually it's interesting this is the first time the word freedom was ever used in political document in recorded history. That's how closely associated debt is with freedom. The original use of this in terms of politics was associated not with the ability to be politically free or to have the right to vote or something like that but the recognition that true freedom stems from economic freedom. The king later boasted that he restored the child to their mother and the mother to her child and canceled all interest due. And this first debt jubilee as they became known as was sort of light on the details of what exactly occurred but going and looking at further ones that came out there were many kings, Hammurabi did this very famously, they would cancel not only outstanding loans but all forms of debt servitude even those based on failure to pay fees or criminal penalties. And the only thing that was left out where these commercial loans so one business loaning to another business. You saw this happening hundreds of times and it's even enshrined in the Bible in the forms of the great jubilees where land was returned to the original owners after 50 years, slaves were freed, and debts were forgiven. This was how the ancient world worked.
[1:09:33] This was what kept the economic system of the ancient world working every time that it came on the precipice of collapse debts were forgiven people were freed and life went on. But the problem with doing this all the time is it emphasizes the fact that debts really aren't real. They're made up things that can be forgiven or lost or forgotten about anytime somebody removes the threat of violence from the debt. In this case when a king who was forcing these debts says, "We will not enforce them anymore," people are free and the debt disappears. As soon as the violence is gone the debt is to. This is a concept that's threatening to nations. This is a concept that's threatening to world political systems, economic systems, and to nations as a whole. And it has been the reason why we haven't seen a debt Jubilee in this millennium to speak of. Nations would rather collapse, civilizations fall apart, than issue debt jubilees. We saw the invention of monetary theory trying to soften the edges of economic collapse, introducing welfare to people who couldn't pay for their things because they're so indebted, unable to survive without the assistance of the government. And this was preferred over a system that forgive debt that exposes that the economic and political power of the world rests on the threat of violence and forcing these debts. Because once those ideas are fresh in people's minds it takes decades, hundreds of years, for things to go back to normal for political power to be restored in the hands of those who own the capital of those who owned the economic means to control these debts. And if you're those in charge the people who can't forgive these loans, we don't want that. But as we face the world that is increasingly indebted, where every bit of economic growth is built on debt that's double, triple, or even more, as
[1:11:10] we all owe money to everyone, to each other, to another nation, to world banks' organizations, to companies so complicated that no one is entirely sure just how much debt is owned but confident in the fact that it's many many times more money than there exists on Earth at all, well, the only way that we'll be able to get ourselves out of the economic crisis to end all economies is by a world-wide debt jubilee. That's the only thing that can save our economic future and it's something that I think well be seeing a conversation of more in the coming years as the global economy starts turning down. And in this conversation, I want you to think, and we're seeing this play on smaller roles right now, where people are saying student loans maybe we should forgive them all. And for those of us that don't have any student loans or have paid them off, I have no loans. Daniel, I don't know if you own student debt anymore?
[1:12:00] Well, we shouldn't feel like we're getting the short end of the stick if we forgive all other student loans. We shouldn't feel like, "Well, you know I paid mine off well, why don't I get anything now?" because if you were mugged and your neighbor wasn't and you were upset that you lost something because a mugger took it from you, would you want to get even by saying that your neighbor should get mugged to? No.
[1:12:19] Your neighbor says, "I'm so sorry. Let me know if I can do anything to you to help." The same thing we should think of ourselves with these loans with these debts, forgiving somebody else's debt doesn't hurt ourselves. And you can try and pretend that people are irresponsible and get themselves into debts that they shouldn't have gotten into, then you know what? It doesn't fucking matter because ultimately we need to be concerned about the health and the survival of all of us. The happiness of society that's built on mutual respect and loving thy neighbor.
[1:12:46] Well put, David. I think that's a great place to end it. But before we do I think a quote from David Graeber's book, titled Debt, would be an appropriate way to close this show:
Who was the first man to look at a house full of objects and to immediately assess them only in terms of what he could trade them in for in the market likely to have been? Surely, he can only have been a thief. Burglars, marauding soldiers, then perhaps debt collectors, were the first to see the world this way. It was only in the hands of soldiers, fresh from looting towns and cities, that chunks of gold or silver-melted down, in most cases, from some heirloom treasure, that like the Kashmiri gods, or Aztec breastplates, or Babylonian women’s ankle bracelets, was both a work of art and a little compendium of history-could become simple, uniform bits of currency, with no history, valuable precisely for their lack of history, because they could be accepted anywhere, no questions asked. And it continues to be true. Any system that reduces the world to numbers can only be held in place by weapons, whether these are swords and clubs, or nowadays, “smart bombs” from unmanned drones.
[1:14:09] Like always that's a lot to think about. If you want to learn more about any of the topics we discussed today, read sources, find details on these books or maybe look at a full transcript of this episode you can do all that and much more on our website, Ashesashes.org.
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