I just read an interesting book review (posted on Salon, but originally from the LA Review of Books) about the role of debt in civilization and history. The book, Debt: The First 5,000 Years, was written by David Graeber, who apparently played a big role in the Occupy Wall Street movement. I’m not a huge fan of anti-capitalist polemics, and some Amazon reviews accuse this book of being such. However, the review intrigues me by arguing that historians have traditionally overlooked the role of debt in culture.
Intuitively, I agree. I see how debt leads to enslavement in various forms. The problem is that debt, like all economic mechanisms, is vulnerable to abuse. Perhaps that’s why the Bible forbade the collection of interest – it’s too hard to manage a primitive economy fairly when you have such a mechanism. On the other hand, the author Hernando de Soto (The Mystery of Capital) argues that South American economies would become incredibly prosperous if the residents of favelas in São Paulo and other giant cities – as well as farmers in the countrysides – had legitimate titles to their living spaces and could mortgage them.
Continue reading Debt and Culture
Slashdot pointed me at a fascinating article on the deforestation of the planet: Peak Wood: Nature Does Impose Limits | Miller-McCune Online.
I hadn’t appreciated the role of forests in causing relocation of native American settlements on the US east coast. Or the role of wood fires in making traditional Christian teachings of Hell sound like nonsense (where would they get enough trees to keep everyone in Hell burning forever?).
My daughter in law, with her recent graduate degree in environmental policy, may already be aware of this sad story. The rest of us should read it, too.
Continue reading The Peak of Woods: a Foretaste of the Oil Peak?
Glenn Greenwald, a commentator in Salon, posted a scary observation in which he compares the U.S. economy to Russia and Argentina. He quotes Desmond Lachman, an IMF expert on emerging markets and former Salomon banker, who notes how we’ve seen the same thing in those emerging markets.
In an emerging market, a banking crisis like this looks like a liquidity crisis, and the government tries to shore things up with an injection of cash. In fact, it’s a solvency crisis. Outsiders like the IMF generally recommend to fix such things with transparency not with cash. Otherwise the local oligarchs will manipulate the crisis to get rich off the ‘recovery’ money. Meanwhile, the IMF and such require the government to reduce spending on social programs to pay for the enrichment of the fat cats.
Continue reading Scary Economic Observation