Let's abolish government debt

Let's abolish government debt

BY Erick Vasconcelos

Tuesday, June 30, 2015

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Let's get this out of the way first: It's time to abolish government debt. The State should be unable, effectively prohibited to issue new debt and take loans. There is no justification for government debt, which essentially boils down to contracting debt to be covered by future taxes paid for by third parties; by the people -- you and I.

Former Brazilian Revenue Service Auditor Maria Lucia Fattorelli isn't as radical. In an interview 'A dívida é um mega esquema de corrupção institucionalizado', Carta Capital, July 9, Fattorelli, who is part of the Greek Financial Audit, explains how public debt works as a direct income transfer to the rich, and why the so-called "audit" is necessary to free countries from cumulative debt that charges interest over interest. A hijack!

The need for an "audit", as opposed to the straight abolition of debt, is common within many sectors of the left. This happens because the left is viscerally afraid of delegitimising power and the government; so for them only "illegitimate" debt should be dropped. However, the prerogative the Government possesses of contracting debt and forcing the people to pay for them remains unquestioned. It's, perhaps, another manifestation of the spineless shrillness of the left: for them, the government is powerless when faced with the external forces of capital, which demand that it incurs ever-growing debt.

Such fairy tales hide the fact that the Government uses debt precisely to subsidise capitalists. It also hides the fact that it is a system of channelling wealth extremely efficiently and usefully for the Government; absorbing credit from the economy and directing them for the business that functions as its arms. It happens sometimes for strictly electoral reasons. As Fattorelli notes, the Lula Administration paid the external debt Brazil had (at four per cent interest) issuing internal debt, paying over 19 per cent interest to national capitalists. That was celebrated as a victory for the Brazilian people.

Obviously, it's nothing more than a subsidy to national capital, which is expensive, unproductive, and needs increasing amounts of resources to keep being viable. These increasing subsidies inflate debt, which requires an economy in constant growth to manage interest. As debt snowballs, we reach the fiscal crisis we have nowadays, requiring "adjustments" and "austerity" -- including even the so-called "fiscal pedallings", the ridiculous name given to the accounting gymnastics committed by Dilma Rousseff's Administration to avoid going over the federal budget.

But auditing is not the solution. The solution is to end debt. I don't mean a moratorium, but a delegitimation of debt contraction by the State. The Goverment must be made incapable of acquiring debt for the citizens to pay, no matter the reason. Full stop.

It's a radical idea, but debt should be abolished. Today!

Over time, it not only morphed into a system that generates increasing debt and that channels money from the individuals to banks' and capitalists' pockets, but government debt also became more shameless. If governments used to issue "war bonds" when they wanted to bomb someone, nowadays that isn't even needed. Governments are able to issue unlimited debt for whatever the reason.

Debt is unquestionable. It's sacred. We should always find a way to pay it, or at least part of it. Economists speak of fiscal adjustments. They fear that shouldn't the Government pay up, it won't be able to finance itself in the future. That clearly isn't a bug; it's a feature. Government shouldn't be able to finance itself anyway.

Some fear that Government wouldn't be able to execute its large infrastructural projects without debt. Relax, people. The current Brazilian debt of over $1 trillion hasn't been able to produce any sort of infrastructure either. Some fear that a country's economy will go down the drain without debt. But that's exactly the goal here: ending the economy that throws the poor into debt to subsidise capitalists.

Government debt is unjust. It's immoral. It's a system of income redistribution for the rich. It has to be destroyed.

Erick Vasconcelos is a journalist for the Center for a Stateless Society. www.media@c4ss.org

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