The whole world is floundering in debt. Greece barely has its nostrils above water and the U.S. markets plunged 4% in one day because of worries that the rest of Europe may follow. Meanwhile, large numbers of Americans are underwater on their mortgages and many are walking away from them, even as the Obama administration plans another bailout to “help” them at the taxpayers’ expense. All this got me thinking about debt.
Is debt IMMORAL?
Interestingly, the history of debt indicates it was long considered just that. While the early Romans toyed with loans and interest, the Catholic Churchcondemned it in the Middle Ages and considered the very charging of interest, then called usury, the equivalent of heresy. Usury later came to mean only unreasonably-high interest.
According to a good article in Wikipedia, usury, meaning the charging of any interest at all, has been denounced by a number of religious leaders and philosophers in the ancient world, including Plato, Aristotle, Cato, Cicero, Seneca, Plutarch, Aquinas, Muhammad, Moses, and Gautama Buddha. The sense was that people who charged interest were demanding something without themselves performing any useful work or trading any thing of material value.
In The Devine Comedy, Dante places the usurers in the inner ring of the seventh circle of Hell, below even suicides. The usurers shared the ring with blasphemers and sodomites. (How does that make you bankers feel?)
Not only did the early Christians condemn the charging of interest, Judaism did as well, but with an interesting twist. It was kosher for Jews to charge gentiles interest, but not each other. The rule was cleverly exploited by English nobility when they opportunistically used Jews as middlemen to collect interest and taxes, thus deflecting criticism from themselves.
As for Islam, the Qur’an condemns “.. . those who persist in usury . . . ” to “…incur Hell, wherein they abide forever.” (ibid.) As I understand it, Islamic banks don’t charge interest, but accept part ownership in return for loans.
Being the son of Great Depression (GD) parents I absorbed as though by osmosis their instinctive distrust of debt. If they needed something and didn’t have the money to buy it, they waited until they did, or we did without. If something broke, we repaired it (if at all possible). Shoes? Re-sole. Tires? Retread ’em. Sock got a hole in it? Darn it. (Pun intended.) Food too expensive? Grow a Victory garden in the back yard. Can (verb, transitive) the vegetables for winter. What a different world that was! I still remember using my first credit card, circa 1965, with an abundance of caution and always paying the full balance.
One reason, perhaps, for the linkage of immorality to usury is the history of violence when the rate is too great (the modern definition of usury). If you default on the mob, you know what happens. Nowadays of course it is a federal offense to threaten violence to collect. Instead we rely on the denial of more credit as a punishment for defaulting. That seems to work, more or less, for citizens, but it’s more awkward, and less certain, for whole countries. Greece was close to defaulting on its debt (bonds). They did get bailed out, but now it’s the whole EU that is shaky and that is what caused last week’s precipitous market decline. After all, who is left to bail out the EU?
I would be remiss if I did not note that Greece got into its jam through flagrant and profligate (aren’t those great adjectives?) abuse of its finances. They didn’t want to live within a &#$@<* budget, so they didn’t. This is one of those teachable moments, IF we will pay attention.
If the Congress had a Great Depression mentality we wouldn’t be in the mess we are in, but let’s face it, Congress is a reflection of the culture it represents. While some say it is invalid to compare the U.S. to Greece because of the vast difference in size, others, rightly, point to the similarities in stats like the debt-to-GDP ratio.
The Tea Party seems to sense that the incumbents HAVE been immoral, somehow, and since they can’t consign them to the 7th circle of Hell, the next best thing is to vote them out. (The Pope is busy with other matters these days.)
Now that I think of it, a pay as you go (PAYGO) scheme was enacted by Congress in 1990. (It was probably responsible for Clinton’s relative fiscal success.) PAYGO expired at the end of 2002, was brought back in 2007, but has since been the subject of various “exceptions”, not least for the Great Recession. Seems to be ancient history now. Congress now has even decided to forego the annual charade known as a budget resolution.
So, if like Greece’s our house of cards tumbles, what then? Maybe China and Japan will come and, in an ironic fit of righteousness, break our knees.