Tuesday, May 14, 2013

Guilt, Debt and War

"Why should the poor be flattered?"

It's conventional wisdom that the national debt should be distributed equally among the national population. This also seems to be the opinion of those who run the U.S. National Debt Clock. Perhaps most striking is the calculation on the Times Square clock which tells you what "your family share" of the national debt is.

But shouldn't such a calculation be measured off against your share of the national dividend? What is THAT, you might ask? Well, if a nation can go into debt, and if that debt can be distributed through its population, then surely the nation can work its debt off, and the fruit of that labour, once the debt is payed off, can be distributed on the same principle. Right?

I.e, when your warmongering elite decides to squander your labor on a foreign adventure, it is investing [what would have been] your peace dividend in the pursuit, presumably, of some future profit. If they can saddle you with debt to that end, they can, presumably, also lavish you with the spoils of that war when it is won. Right?

Or if they are really only protecting your property with the war, it's not doing a lot of good if your already-mortgaged $100,000 home now also owes "your family share" of $115,000 more. Right? Surely at some point the same government will start paying your mortgage out of the spoils (keeping it simple, the oil revenue) of the same war effort. Right? If you're going to be footing the bill by sharing the debt, in other words, shouldn't you also have a share in the profit?

It's a bit too simple to think about this only in terms of war, I know. And it's a distasteful way to make money, I think most of us agree. The problem is that we don't feel quite as bad going into debt for it. That's how we allow ourselves to be exploited.

The truth, however, is that underwriting the war effort by accepting our moral share—say, $53,000—of the warring state's national debt is no better than earning $53,000 on the occupation of Iraq.

Fortunately, you're probably not as guilty as you think.

I've done a bit of math. First, keep in mind that the U.S. is nowhere near going bankrupt. Its national wealth is at around 50 trillion. The national debt is only around 17 trillion.

Much more importantly, the national debt should obviously be distributed according to wealth, which is a measure of how profits (i.e., the national dividend extracted by preferred means under capitalism) have been distributed over time. So the top 20% owes 85% of it. The bottom 60% owes only 4.2. On overage, the personal share of a member of the bottom 80% is not 53,000 dollars as the clock says, but around 10,000. If you're in the bottom 60% you'll owe on average under $4000.

But these averages are actually still deceptive because they lump far too much variation into big population segments. It's much easier to work out in your own case simply by figuring out your net worth.

Suppose you're an American who is worth 100,000 dollars (what you own minus what you owe). That's one 500 millionth of the nation's total wealth. Properly speaking, then, you owe 34,000* dollars (one 500 millionth of the debt). If you are a multibillionaire, by contrast, you're a bit more implicated in the nation's financial situation. Suppose you are worth 50 billion, or one 1000th of the nation's total wealth. I put it to you that you are responsible for 17 billion worth of the national debt.

The national debt clock is a backhanded attempt to flatter the poor by giving them responsibility for the state of the nation's finances. It's a guilt trip, pure and simple. Don't fall for it. If you own nothing, you owe no part of the national debt. If you are already personally in debt (say, because you hold a student loan), don't add "your family share" of the national debt to your sense of guilt. Just keep at it and pay off the debts that are actually yours.

Then, when your ship comes in, just remember that it also contains a fair share of the nation's debt, which is, remember, still easily covered by the nation's wealth. The rich are doing their job better than you think. They're protecting their assets.

We that no revenue have but our good spirits to feed and clothe us, on the other hand...


Will Moye said...

I think most Americans feel no sense of obligation to/for the national debt. Most of us--rich and poor--have such a sense of entitlement that we don't see this as "our" problem. It is "their" problem...whoever "they" are.

Thomas said...

That's probably true. I think in my post I'm trying to figure why that is. And the reason I'm working on is that the national debt doesn't seem real because no one has ever considered what a national surplus would look like.