Saturday, April 10, 2010

Repudiating debt

Is Debt Repudiation a Good Thing or a Bad Thing? "George Washington" quotes a number of economists and political writers who argue that it's a good thing to repudiate consumer and mortgage debt, allow the banks to go bankrupt, and nationalize the financial system.

In general, an enterprise that to survive needs a bailout or other direct support from the government has ceased to be be a private business and has become a public trust, an endeavor that must not only be regulated by the government (it is arguable that even private citizens may legitimately be mere regulated by the government), but subject to its direct control. If the people are paying the piper, it is we who should call the tune.

The downside is that our present government is not presently very accountable to the people. Under today's circumstances, nationalizing the banks would just substitute one unaccountable bureaucracy for another. However, even under our capitalist pseudo-democracy, the government has at least the appearance — and possibly some actual substance — of public accountability. It is clear that private capitalist corporations have zero public accountability: they are explicitly and intentionally run not for the benefit of the people but solely for the benefit of their shareholders and executives, who have an obvious interest in looting the people.

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