Croatia just canceled the debts of its poorest citizens • Hacker News Board

Re: Croatia just canceled the debts of its poorest citizens

#21

Post by graeme » Sun, Feb 01, 2015, 3:18 PM UTC

bmajz wrote: post #18

rhizome31 wrote: post #14

Earlier quoted context omitted.

I'm reading Graeber's Debt, the first 5000 years which explains how this practice is as old as debt itself. It already existed in ancient Mesopotamia. I highly recommend this book to anyone interested in the topic. It also shows how debt is deeply linked to slavery, women slavery in particular, through the phenomenon of debt peonage.

Sounds awesome - will have to check it out. Totally random aside: does it talk about the evolution of debtor's prisons after slavery was no longer an option? I always wondered why people thought it made sense to lock someone up with no economic recourse to pay down a debt. There were probably much better options to deal with the potential moral hazard.

From wikipedia: Destitute persons unable to pay a court-ordered judgment would be sentenced to these prisons until they had worked off their debt via labor or secured outside funds to pay the balance; the product of their labor went towards both the costs of their incarceration and their accrued debt.

http://en.wikipedia.org/wiki/Debtors'_prison

Labor was one form. I imagine being sent to prison moved families to action to bail out the debtor when possible.

Finally, consider all the debts paid to avoid going to debtors prison.

I don't know anything about the evolution of the system. Just pointing out that it wasn't an insane way to acheive the goal of debt payment. (Though a totally inhumane way)

Re: Croatia just canceled the debts of its poorest citizens

#22

Post by Sandman » Sun, Feb 01, 2015, 3:18 PM UTC

raverbashing wrote: post #16

rfrey wrote: post #2

The article says the government "convinced" banks and other companies to cancel the debts, but the lenders will not be compensated. It's left as an exercise to imagine how the lenders were convinced. I can see the benefits of getting a large number of people out of what must be a terrible situation - the numbers suggest most of the people affected probably didn't have enough income to even service their debt. But I w…

" allowing the middle class to own property, start businesses, etc," Well, there's this crazy concept called "saving money" where you don't borrow from a bank but rather put some money aside every month to be able to afford something expensive I wonder what would happen to property prices if lending was severely restricted, maybe then the value would actually be affordable and not a lifelong debt that becomes unservi…

Well, there's this crazy concept called "saving money" where you don't borrow from a bank but rather put some money aside every month to be able to afford something expensive

Yeah. Unfortunately this only works if you have enough money after you pay the bills etc. to put aside.

Re: Croatia just canceled the debts of its poorest citizens

#23

Post by kryptiskt » Sun, Feb 01, 2015, 3:20 PM UTC

raverbashing wrote: post #16

rfrey wrote: post #2

The article says the government "convinced" banks and other companies to cancel the debts, but the lenders will not be compensated. It's left as an exercise to imagine how the lenders were convinced. I can see the benefits of getting a large number of people out of what must be a terrible situation - the numbers suggest most of the people affected probably didn't have enough income to even service their debt. But I w…

" allowing the middle class to own property, start businesses, etc," Well, there's this crazy concept called "saving money" where you don't borrow from a bank but rather put some money aside every month to be able to afford something expensive I wonder what would happen to property prices if lending was severely restricted, maybe then the value would actually be affordable and not a lifelong debt that becomes unservi…

Doing five years of work to get the money you need to capitalize on an opportunity is often not an option.

Re: Croatia just canceled the debts of its poorest citizens

#24

Post by [deleted] » Sun, Feb 01, 2015, 3:21 PM UTC

rfrey wrote: post #8

failed_ideas wrote: post #4

In part, I love this idea. However, as someone who struggles with debt, I've worked to the point of causing serious health issues just to keep my head above water, so if Canada were to do this, I'd be more than ticked. The slacker next to me gets a clean slate, and I get an early grave.

I totally understand your sentiment, but to me this reflects one of the biggest scams that has ever been pulled on the "average guy" - the notion that debt has moral weight. I was taught by my parents, and by the books I read and TV shows I watched, that "paying your debts" made you a good person. If you don't pay your debts you're slacking. We've all heard the parables of the great person who went broke, but managed…

[deleted]

Re: Croatia just canceled the debts of its poorest citizens

#25

Post by [deleted] » Sun, Feb 01, 2015, 3:21 PM UTC

rfrey wrote: post #8

failed_ideas wrote: post #4

In part, I love this idea. However, as someone who struggles with debt, I've worked to the point of causing serious health issues just to keep my head above water, so if Canada were to do this, I'd be more than ticked. The slacker next to me gets a clean slate, and I get an early grave.

I totally understand your sentiment, but to me this reflects one of the biggest scams that has ever been pulled on the "average guy" - the notion that debt has moral weight. I was taught by my parents, and by the books I read and TV shows I watched, that "paying your debts" made you a good person. If you don't pay your debts you're slacking. We've all heard the parables of the great person who went broke, but managed…

[deleted]

Re: Croatia just canceled the debts of its poorest citizens

#26

Post by cmdrfred » Sun, Feb 01, 2015, 3:21 PM UTC

rfrey wrote: post #8

failed_ideas wrote: post #4

In part, I love this idea. However, as someone who struggles with debt, I've worked to the point of causing serious health issues just to keep my head above water, so if Canada were to do this, I'd be more than ticked. The slacker next to me gets a clean slate, and I get an early grave.

I totally understand your sentiment, but to me this reflects one of the biggest scams that has ever been pulled on the "average guy" - the notion that debt has moral weight. I was taught by my parents, and by the books I read and TV shows I watched, that "paying your debts" made you a good person. If you don't pay your debts you're slacking. We've all heard the parables of the great person who went broke, but managed…

I think this is true about loans from banks and credit cards. One place I don't believe this is true is for personal loans, often they have no interest and while you can be declined (they can so no), it is often socially awkward to do so.

Re: Croatia just canceled the debts of its poorest citizens

#27

Post by colinbartlett » Sun, Feb 01, 2015, 3:22 PM UTC

bmajz wrote: post #18

rhizome31 wrote: post #14

Earlier quoted context omitted.

I'm reading Graeber's Debt, the first 5000 years which explains how this practice is as old as debt itself. It already existed in ancient Mesopotamia. I highly recommend this book to anyone interested in the topic. It also shows how debt is deeply linked to slavery, women slavery in particular, through the phenomenon of debt peonage.

Sounds awesome - will have to check it out. Totally random aside: does it talk about the evolution of debtor's prisons after slavery was no longer an option? I always wondered why people thought it made sense to lock someone up with no economic recourse to pay down a debt. There were probably much better options to deal with the potential moral hazard.

Re: Croatia just canceled the debts of its poorest citizens

#28

Post by rhizome31 » Sun, Feb 01, 2015, 3:22 PM UTC

bmajz wrote: post #18

rhizome31 wrote: post #14

Earlier quoted context omitted.

I'm reading Graeber's Debt, the first 5000 years which explains how this practice is as old as debt itself. It already existed in ancient Mesopotamia. I highly recommend this book to anyone interested in the topic. It also shows how debt is deeply linked to slavery, women slavery in particular, through the phenomenon of debt peonage.

Sounds awesome - will have to check it out. Totally random aside: does it talk about the evolution of debtor's prisons after slavery was no longer an option? I always wondered why people thought it made sense to lock someone up with no economic recourse to pay down a debt. There were probably much better options to deal with the potential moral hazard.

I'm only half way through the book, no mention of debtor's prisons so far.

In many cases the person retained as peon is not the debtor but a relative, typically the daughter. The creditor may also let the peon believe that she will be able to pay her debt with the pay he gives her, like pimps do to prostitutes they've "helped" crossing a border.

By the way, I don't think we need to use past tense when discussing this topic.

Re: Croatia just canceled the debts of its poorest citizens

#29

Post by falcolas » Sun, Feb 01, 2015, 3:22 PM UTC

Sandman wrote: post #22

raverbashing wrote: post #16

Earlier quoted context omitted.

" allowing the middle class to own property, start businesses, etc," Well, there's this crazy concept called "saving money" where you don't borrow from a bank but rather put some money aside every month to be able to afford something expensive I wonder what would happen to property prices if lending was severely restricted, maybe then the value would actually be affordable and not a lifelong debt that becomes unservi…

Well, there's this crazy concept called "saving money" where you don't borrow from a bank but rather put some money aside every month to be able to afford something expensive Yeah. Unfortunately this only works if you have enough money after you pay the bills etc. to put aside.

Plus, saving up the 10-50 thousand dollars (say, to start a restaurant in the US) required to start a business would take a significant chunk of someone's working lifetime.

To use a more concrete example, you can't make money weaving cloth when you can't afford a loom.

Re: Croatia just canceled the debts of its poorest citizens

#30

Post by DanielBMarkham » Sun, Feb 01, 2015, 3:24 PM UTC

Related sidebar: one of the observations Jefferson made while in France at the beginning of the French Revolution was that institutional debt prevented needed changes from ever taking place. That is, the country was so intertwined in various entities owing various other entities that there was no solution that was acceptable to a plurality.

One of the ideas I've toyed with over the past few years is a "debt sunset clause" for all debts, both public, private, institutional, and governmental. Whenever you lend money, you have, say, 30 years to get it all back. Or it's gone. The clock starts when you write the check.

From a market standpoint, the additional risk would just be written into the interest rate. But from a systemic standpoint, major gains could be achieved. That way you wouldn't have to have "debt holidays", "debt forgiveness" and so on. It would just take care of itself. (And if you wanted, you could have different time frames for different types of debt, but then you're heading down the over-complicating route again)