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You’ve probably heard of debtors’ prison, a prison where people who hadn’t paid their debts could be kept under lock and key until they paid their debt or got somebody else to pay for them. It was a dreadful system. Charles Dickens, whose father was housed in a debtors’ prison for a while, wrote eloquently about it.
We had similar prisons in this country until around 1831 when the United States government abolished imprisonment for debts owed to the federal government, and most states soon dropped the practice too. To imprison somebody for failing to pay a debt is fundamentally crazy – OK, let’s say it’s just fundamentally counterproductive – because it deprives the debtor of the ability to earn the money to pay off his or her debts.
What brings debtors’ prisons to mind in these paragraphs is the way debtor nations are treated these days. It’s called austerity. It’s equally counterproductive – or, in a simpler word, crazy.
A good example of the craziness is what’s happening to Greece. Greece has got some big, bad debts and hasn’t got the money to pay them. Now the grand institutions that can loan Greece money aren’t throwing the nation into debtor’s prison. But they are demanding ball-and-chain austerity. They won’t loan Greece anymore money unless that nation continues to fire thousands of state workers, cut the wages of thousands and thousands of others, drastically reduce workers’ benefits and slash their pensions. Of course, when you do that to a nation, the entire economy declines, more and more people loose their jobs or have to take dramatic pay cuts. That’s what’s happening in Greece today.
As every taxpayer knows, the way a nation gets money to pay its debts is by taxing its citizens, the ones who are actually making money. But when the economy sinks and people earn much less or nothing at all, the tax revenue plunges. In other words, as the institutions that loan money to Greece insist on these austerity programs, the Greeks are less and less able to pay off their debts.
Republicans, who haven’t shown a deep grasp of economics over the past 100 years, are eager to have the United States immediately “put its fiscal house in order” and “cut the deficit.” This means slashing government payrolls and cutting or eliminating government programs – except those for sacred national defense, of course. But because we have a Democrat in the White House and because Democrats control Senate, Republican suitors haven’t been able to completely have their way with the economy.
Interestingly, the conservatives did win big in England and they immediately imposed an austerity budget on their fellow subjects. They believe it’s imperative that England immediately “put its fiscal house in order” and “cut the deficit.” As a result, the country has slid down and backward economically. But England, despite its grim stagnation, isn’t in the desperate situation that Greece is in. Greece is in the new version of debtors’ prison.