Saw David Graeber, author of Debt: The First 5,000 Years, on Up with Chris Hayes. He had an interesting perspective on debt. Within the current financial crisis, we tend to think this is something unique, that having such a high debt to Gross Domestic Product (GDP) ratio never happened before. But it has...
Debt as percentage of U.S.Gross National Product (GDP)
The above chart applies to the U.S. and government debt (notice where the peaks are located in history), but such bubbles have occurred as long as debt has existed on personal debt as well.
How did others handle these huge debt loads? The solution for most involved some form of debt forgiveness. The reason was that when the debt was maintained, people became slaves to their debt, did not buy things, which caused their economy to stall and eventually collapse.
So having everyone carrying a high level of debt often leads to a stall in economic growth, much like we're experiencing now.
And Graeber (who happen to be a part of the Occupy Wall Street movement) contends the solution to our debt problems are much the same. A lot of the debt (personal debt like student loans and corporate debt) needs to be forgiven. We done that for the corporate giants like AIG, but have failed to use the same logic on personal debt. In fact, we've made it harder for people to be forgiven for personal debt by not certain forms of debt (like student) loans to be waived during personal bankruptcy.
So we should just give the irresponsible debtors a free ride?
What about the responsible ones who did not go into debt, who made responsible choices?
- Charlie Rose - A conversation with anarchist David Graeber about anthropology
- Really interesting interview between Charlie Rose and Graeber in 2006. The discussion focuses on anarchism...fascinating.
- David Graeber - Wikipedia, the free encyclopedia
- David Rolfe Graeber (born 12 February 1961) is an American anthropologist and anarchist who currently holds the position of Reader in Social Anthropology at Goldsmiths, University of London. He was an associate professor of anthropology at Yale University, although Yale controversially declined to rehire him, and his term there ended in June 2007. Graeber has a history of social and political activism, including his role in protests against the World Economic Forum in New York City (2002), membership in the labor union Industrial Workers of the World, and an early role in Occupy Wall Street.