International Debt, the debts that nations, often quite poor, owe to other nations and banks, is leading to disaster. There is something like 200 trillion dollars worth of such debt, and 24 nations in crisis because they can’t pay off their debts. The burden of debt falls on the poor and disenfranchised, as debtor nations impose taxes and cut back benefits. We’re talking massive human tragedy unfolding around the world.
What is it
According to a report from the Jubilee Debt Campaign, there are currently 24 countries facing a full-blown debt crisis, with 14 more on the verge. Globally, there is about $200 trillion of debt on the books. Although the poor and disenfranchised of the world play no role in negotiating these loans, in debt crises they usually end up paying the price. So when a country borrows money, who or what is the “economic agent” responsible for taking on the debt? Can traditional economic theory explain why we face debt crises and how we can get out of them? Or do we need a new economic model that dispels some of the myths of the traditional model and offers a more ethical solution to the global debt crisis? John and Ken are held to account with Julie Nelson from the University of Massachusetts Boston, author of Economics For Humans.
With 200 trillion dollars of debt held worldwide and over a dozen countries in crisis because of their inability to repay borrowed money, John and Ken take up a pressing question: the ethics of international debt. First, the two analyze the concept of debt. While it all seems straightforward on an individual level, things start to get complicated on the international level, when entire countries become the borrowers. Ken raises the problem that when a country borrows money, the people who take the loan may not be the same people who pay the loan back—for instance, when loans are paid back generations later, or when a president or dictator takes loans in their own self interest and forces their subjects to pay back the debt.
John and Ken take a break to turn things over to Shuka Kalantari, who files the week’s Roving Philosophical Report on how debt can cripple entire nations (see below). Afterwards, the hosts welcome the week’s guest, Julie Nelson, a professor of economics at University of Massachusetts Boston and author of Economics for Humans. Professor Nelson helps the hosts understand how the situation of international debt has become a crisis, and who is affected. She explains that many of the problems associated with debt come from poverty and the “Wild West” of the international financial system.
After a short break, the John, Ken, and Professor Nelson talk about ways to model the concept of debt on the international level, and then take questions from callers in the radio audience. After questions about how debt might affect dominance and inequality in the international system, John asks Professor Nelson a big question: if she had power over all international debt, how would she solve the problem? Nelson said she’d first cancel debts, and also shift the way loans are given. The three end up the show discussing how the simple version of ethics of a debt—where it’s ethical to repay one’s loans—might be more complicated.
- Roving Philosophical Reporter (seek to 7:21): Shuka Kalantari looks into the debt crisis of Puerto Rico, where the government is 72 billion dollars in debt—but, unlike the rapper 50 Cent, Puerto Rico cannot file for bankruptcy.
- Sixty-Second Philsopher (seek to 46:38): Ian Sholes talks about his own understanding—or lack of understanding—of debt, from the movie The Big Short to headlines advertising the debts held by cities and companies around the world.