[OPE] $4.28 trillion ($4,284,500,000,000) and counting

I realise $4 trillion of debt is a lot of debt, but from a Dutch perspective, to get any reasonable economic discussion going about debt I think you ought to verify a few things such as:

1) Who holds this debt, and what real consequences does that have
2) What are the conditions of the debt
3) What is the real structure of debts and credits
4) Over what interval do you have to pay it back, in what amounts
5) What are the assets backing this debt
6) What amount of new income has to be generated to pay it back
7) What can you reorganise to reduce the debt

Once you do all that, the debt problem shrinks a great deal, and it turns out that this is not the central problem, which, as Marxists know, concerns social relations.

Simply put, the real economic problem is that you have a rather select group of people who use very large chunks of borrowed capital, levered on what they already own or control, to trade profitably in already existing assets the world over, with a sophisticated apparatus of risk calculations. It's not a problem for them obviously, but it is an economic problem in aggregate.

It is a structural economic problem, beyond financial crises in which people find out they were a bit too adventurous or hungry for yields (which, because the chunks of capital are very large, have consequences for everybody when things go wrong), because, in aggregate, it corrupts the very motivation to produce more of the goods and services that the world desperately needs to survive and prosper, and creates an ethos (a morality) where what people primarily care about is whether they can extract net income from an activity - any kind of activity - which will support their consumptive lifestyle. You live now, pay later, or preferably somebody else pays (socialising the costs, privatising the benefits).

Specifically, sociologically speaking, it drowns the whole question of what entitles people to income & wealth in a postmodern soup, in which the controversy just focuses on whether certain lifestyles or models of human development are acceptable, tolerable or fitting, without being able to resolve anything much definitely about that, fashions aside; how such questions happen to be resolved typically just depends on who has the most clout or the biggest mouth etc.

No doubt all this contains progressive aspects, insofar as it broadens the scope of the possible, but not just anything goes, because, in the end, at least from an economist's point of view, the income has to come from somewhere and "somebody" has to produce the wealth to sustain it. The problem there is that the very process of wealth creation becomes a mystery, since people can extract a claim to goods and services even simply by tapping numbers on a PC, with the right connections. It seems they are "creating wealth", but they might just be trading in wealth entitlements or appropriating it.

Andre Glucksmann worries about a sort of nihilism, and the Pope complains about moral relativism etc. but as I've said before, in reality there are real absolutes in a human life anyway, even if people "think" they are so "clever and classless and free" that they think they can do just anything, and they should be able to do that. As a freshman student, a catholic flatmate of mine (a computer engineer) drily explained it as follows: "If you don't eat, you don't shit, and if you don't shit, you die". Then I read Marx & Engels who argued that the ruling ideology in each epoch is the ideology of the ruling class. Point is that if the ruling class operates morally and financially very dodgy methods to claim more income & wealth, then everybody else thinks that is at least in principle okay for them to do as well - what's good for the goose is good for the gander, and from there, it is just a matter of how strong or powerful you are to assert your claim. As a corrolary, you get people trying to moderate (or meddle) in other people's lives, for all sorts of reasons which are in dispute, to maintain some sort of social harmony.

Everything seems to be fine until the absolutes for society, which, as economists know, do exist, begin to assert themselves visibly and palpably, and with a vengeance. But faced with that, there's a still conundrum, since how exactly you will respond to this ultimately depends on an idea of what is good for a human life, and how to get there, and if there isn't even any agreement about evaluating that, any financial policy will be interpreted as reflecting just a particular bias. In this sense, Lenin argued that "politics is concentrated economics". It just happens to be something most people would rather avoid being involved in, and in view of the above, why should they anyway?

Jurriaan

_______________________________________________
ope mailing list
ope@lists.csuchico.edu
https://lists.csuchico.edu/mailman/listinfo/ope
Received on Fri Nov 21 16:35:17 2008