Saturday, January 25, 2020

What do Greg Abbott, Croatia, the Roman Emperor Hadrian, ancient Hebrews, 6th century Greeks, Hammurabi, Elizabeth Warren, and Bernie Sanders all have in common?

"Forgive us our debts, as we forgive our debtors."
- Jesus Christ, The Lord's Prayer

What do Governor Greg Abbott and the GOP-controlled Texas Legislature have in common with Croatia, Rome's openly gay emperor Hadrian, an ancient Hebrew religious celebration, 6th century BC Athenian Greeks, Hammurabi, as well as Elizabeth Warren and Bernie Sanders?

They all implemented (or in the case of the Democratic presidential candidates, want to implement) large debt forgiveness programs that boosted their popularity and helped resolve problems deriving from intractable income inequality.

Starting in Texas, last year the Governor signed legislation to abolish Texas' Driver Responsibility surcharge, eliminating a whopping $2.5 billion in debt for around 1.4 million people, overriding past concerns that doing so would be unfair to those who'd already paid. Governor Abbott has also signed legislation to ban red-light cameras that eliminated penalties for nonpayment of old tickets, not to mention bills to eliminate $1.3 billion in outstanding toll road fines and fees and to pay student loans of peace officers.

But there are all sorts of historical examples of government-funded debt forgiveness programs dating back to the beginnings of government. Hammurabi canceled public debts four times in response to civil unrest, and when he "died in 1749 BC after a reign of 42 years, his successor, Samsuiluna, cancelled all debts to the State, and decreed that all tablets should be destroyed except those concerning traders’ debts."

Famously, in the Bible, "Jubilee" was the term for an ancient, once-every-50-year Jewish tradition celebrated during the first millennium BC in which public debts were forgiven and prisoners and slaves were freed.

In the 6th century BC in Athens, the lawmaker Solon implemented the "Seisachtheia" laws (try saying that three times fast!) which "cancelled all outstanding debts, retroactively emancipated all previously enslaved debtors, reinstated all confiscated serf property ... and forbade the use of personal freedom as collateral in all future debts."

Here are a couple more I heard recently on The History of Rome podcast that Grits began to plow through during my recent surgery recuperation: After defeating Marc Antony in 27 B.C., Octavian (aka, Augustus) burned all debt records from before the battle of Actium, thus wiping out debts prior to the civil war that ended with his ascension to power.

And upon assuming authority after Trajan's death, the Roman emperor Hadrian earned the goodwill of the people by forgiving all public debts, to the amazement and scorn of a disdainful Senate. Despite these spendthrift policies, which also extended to earning the allegiance of the legions through large pay increases, Gibbon recorded that Hadrian's reign constituted "the period in the history of the world during which the condition of the human race was most happy and prosperous."

And of course, there are modern examples besides in Texas. In 2015, Croatia engineered debt forgiveness including debt to banks, telecom and utility operators for its 60,000 poorest citizens in an effort to give them a fresh start.

Now we can add Sanders and Warren's plans to forgive student-loan debts to the list. Although that was the newshook that made me dig up these historical analogies, Grits doesn't want to get too bogged down in the pros and cons of that proposal. I probably agree with it; maybe you don't; this isn't the place to debate why. Obviously, this blog has been far more concerned with eliminating criminal-justice debt, which is something I think about quite a lot.

These massive debt forgiveness campaigns were all, in a sense, unfair to those whose debts weren't forgiven. Certainly, in the examples from ancient Judea and Athens, slave owners surely were unhappy to watch their property walk free. But in the larger scheme of things, these programs were also a) economic boons and b) incredibly popular, generating excitement and loyalty among their beneficiaries and boosting the images of their proponents. Indeed, a cynic might contend these policies were undertaken by politicians simply aiming to ingratiate themselves with the public. (OTOH, if you're someone whose debt was forgiven, who cares?)

Leaving politics aside, though, one could also argue that all these examples were necessary correctives to oppressive government debt policies which were also unfair and ultimately, untenable.

Perhaps student-loan debts should only be the first step toward a long overdue 21st century Jubilee.


Gadfly said...

Michael Hudson, if you're not familiar with him, has written a LOT about this.

Gritsforbreakfast said...

Thanks! I had not, but now I see his book and will check it out. I'd seen it referenced when researching this post.

Anonymous said...

...and then what happens? No sane person would ever pay back a future student loan, and no bank would make such a loan unless the principal and interest were 100% guaranteed by Uncle Sam. And if money is not unlimited, shouldn't the Government direct such a huge give away instead toward the people who really need it, i.e. arguably those who never have sniffed going to college and have no means of getting the "good paying jobs" to which the college experience / degree opens the door? This sounds much more like a gift to irresponsible middle and upper class heck with the poor people who can't spell college, let alone attend one.

Anonymous said...

What happens if it DOESN'T happen? Houses and cars and less important items go unbought, entrepreneurs remain bound to makework jobs at best, the mental and physical costs associated with bankruptcies and debt bondage (including suicide rates) keep climbing and adding to dollar costs paid by taxpayers. IOW, the economy keeps spiraling for all but those who lent the money and get back the interest. What happens then? The people who did pay off loans get sucked down in that spiraling economy rather than selling products to the buyers who now can participate again in the economy, which is why all the rulers much wiser and experienced than "anonymous" did these things as part of tradition recognizing its wisdom. Better economy and personal welfare for everyone or the self-righteous pleasure of feeling superior as you go down the tubes with those same derelicts as you see them? Hmm . . . .

Anonymous said...

Wholesale debt discharge is a terrible idea unless tied to something like public service, including military service, and even then does not have the positive aspects for society as claimed by Anon 3:00. If such a program is going to be paid for by taxpayers who would have to cough up the money for erasing private debt from banks, than at very most it should be a freeze on the interest from such debts, along with notice to lending institutions and credit card companies that they need to choose who they lend to more wisely lest they get burned repeatedly moving forward. Handouts sound so swell to those who would benefit yet they amount to a government taking to the rest of the equation, and you can be assured that the same people being bailed out will be racking up more debt afterwards unless they are forced to adhere to better spending practices in the future.

Gritsforbreakfast said...

Not sure that applies to student loan debt, 10:07. For years, education was subsidized, in Texas, UT tuition was $2 per semester hour into the 1980s. That's why past generations didn't have the same student debt problem. That's a consequence of government policy, not personal irresponsibility.

Certainly your observation doesn't apply to abolition of driver surcharge debt in Texas, and I tend to think the benefits of ↓ criminal-justice debt outweighs the moral hazards you're worried about.