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

Re: Croatia just canceled the debts of its poorest citizens

#251

Post by ptaipale » Mon, Feb 02, 2015, 6:22 AM UTC

AnthonyMouse wrote: post #210

ptaipale wrote: post #192

Earlier quoted context omitted.

> The reason renters can't buy is that they have bad credit and no down payment. At least over here, the reason is not bad credit nor need for down payment. The reason is that they do not have enough regular, stable income. Their rents are subsidized, but the same subsidy is not available for buying property. Which does make some sense, of course. > Making housing affordable is easy: Subsidize the construction of hig…

> Their rents are subsidized, but the same subsidy is not available for buying property. That's just a whole different brand of stupidity. If you're going to subsidize people, just give them the money and let people decide whether it's more important that they pay rent or buy a house or live with parents and go to college etc. Central planning bureaucrats are going to get it wrong nine times out of ten. > Generally,…

> What land? You can't make land.

In fact, often you can. Just a week ago in Hacker News: https://news.ycombinator.com/item?id=8940235

As to making bigger houses, you're quite right, but that's another aspect of "making land available". The land is there, zoning or lack of building permit does not allow developing it.

Re: Croatia just canceled the debts of its poorest citizens

#252

Post by alejohausner » Mon, Feb 02, 2015, 6:50 AM UTC

rhizome31 wrote: post #14

bmajz wrote: post #6

This is an interesting concept and a really old one to boot. Planet Money recently did a great podcast covering a similar measure (although it was specifically for mortgages) in Iceland: http://www.npr.org/blogs/money/2014/12/05/368723679/episode-... Interestingly, Saudi Arabia also did something similar (alongside many other measures) to boost public support for the new king: http://www.arabnews.com/news/696661

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.

Greaber's book on debt was really interesting. The cancellation of debts is from Leviticus 25:

"And ye shall hallow the fiftieth year, and proclaim liberty throughout all the land unto all the inhabitants thereof: it shall be a jubile unto you; and ye shall return every man unto his possession, and ye shall return every man unto his family. "

Fascinating issue. Graeber explains that poor farmers would borrow from the landlord, be unable to pay, and would end up sold into slavery. Eventually not enough farmers were available to work the land. An economic crisis would ensue. Hence the bit about returning men to their families (to restore the labour force).

That's part of the symbolism of Jesus. He is the Redeemer because he is freeing people from the debt of sin. The Gospels are using language that would have been very familiar to Jews who followed the law in Leviticus.

Graeber's big point, which he articulates at the books's outset, is that we have been brainwashed into thinking that paying off a debt is a moral obligation. If you step back a bit from that idea, it suddenly seems strange and artificial to mix the concept of a financial obligation with that of a moral obligation. But that's what a lot of people do: they mix those two things together.

A lender always takes a risk that the borrower won't repay the loan. That's why, for example, credit card debt, which is not backed by collateral, has high interest rates: the lender is covering his risk. Lender and borrower are always conscious of the odds that the loan will go bad.

But when morality gets added to the equation, it distorts reality in favour of the lender, who can now appeal to a sense of duty or sin to confuse the debtor, and make him forget that the two parties in the loan are making a coldblooded calculation of the odds that the loan will be repaid.

Graeber's other big point is that debt has, throughout history, been a means of creating slaves. But that's kind of another issue.

Great read.

Re: Croatia just canceled the debts of its poorest citizens

#253

Post by cubancigar11 » Mon, Feb 02, 2015, 7:05 AM UTC

I just want to add that Indian governments have always canceled debts of farmers (who make up the majority population) in election year. So this kind of measure is neither novel nor unprecedented, as the article in WaPo suggests.

Re: Croatia just canceled the debts of its poorest citizens

#254

Post by zo1 » Mon, Feb 02, 2015, 7:16 AM UTC

juliangregorian wrote: post #207

zo1 wrote: post #90

Earlier quoted context omitted.

Well, a restaurant isn't the only business venture an individual can get into. Just the other day I saw meme-photo (can't vouch for the validity/truthfulness) about a woman that made money at the beach by attaching balloons filled with margharita mix over her breasts. And charging party-goers (probably mostly male) for the chance to drink out of them. Ridiculous and asinine example, but I bet she started off with no…

Do you libertarians even listen to yourselves? The amount of disease that would spread... "hustling sketchy shit" is not a sustainable model of entrepreneurship.

I'm not a libertarian, I'm an anarcho-capitalist, thanks.

And I'm all ears if you have some valid, debate inducing criticism. Though, I'd appreciate it if you kept it civil, as others have already asked you.

Re: Croatia just canceled the debts of its poorest citizens

#255

Post by dijxtra » Mon, Feb 02, 2015, 7:33 AM UTC

aswanson wrote: post #204

popee wrote: post #45

Hi, croat here. Just one detail, this year there will be elections in Croatia and current gov didn't do anything useful for our economy, so this is kind of popular measure. Don't get me wrong, it's always nice to help, but situation is little bit complicated, taxes are very high and in some way this is not fair to people that are paying everything. Also, there are huge number of people living and exploiting social me…

Don't apologize. Your English far outclasses my Croatian. Interesting, from what you write it seems as though Croatia is dominated by a two-party system, like here in the U.S. Is that true?

We have a multiparty system, but highly polarised society (reminiscent of your cultural war in the US) which results in two dominant parties, although we have all the infrastructure needed for pluralist democracy.

Re: Croatia just canceled the debts of its poorest citizens

#256

Post by raverbashing » Mon, Feb 02, 2015, 7:43 AM UTC

jljljl wrote: post #88

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…

The benefits of saving vs. borrowing really depends on the situation, and it's possible that borrowing is actually more beneficial. Let's say I want to save money to buy a house, and I want to pay in cash (i.e., no mortgage). I estimate it will take me about 20 years to afford the house, so I start putting away money from my pay check. However, since I don't have a mortgage and thus no house to live in, I also have t…

I agree with your calculation, of course you don't need to save for 20yrs, just save for a good down payment

Too bad a lot of people go buy a house on the wrong side of that equation

However, owning vs. renting has an interesting hidden cost: you can move "anytime you want" with rent. Renting usually tracks the market affordability/cost more closely, while your mortgage doesn't change while the price go up or down, BUT if the price goes down this might be a problem.

Re: Croatia just canceled the debts of its poorest citizens

#257

Post by ptaipale » Mon, Feb 02, 2015, 8:10 AM UTC

BSousa wrote: post #132

bsaul wrote: post #107

Earlier quoted context omitted.

Debt cancellation indeed has always existed, greeks just bringed it to another level, with their magic combo : fraud the state's accountings, get as much as you can from the eurozone before the crisis, get as much as you can from other european countries after the crisis, and then 2 years later when things start to stabilize, declare unilaterally that you're not going to reemburse people, and party in the streets ove…

Geesh. I'm no Greek and not fond of Syriza, but god damn, the brainwashing is strong here. a) fraud the state's accountings: True, but the difference was minimal (2.7% or so to 3.07%, and by fraud you mean they accounted for the expenses on arrival and not when ordering, not cook your books). Also, this was well known by all the other countries and none of them made a peep at the time b) get as many as you can before…

> a) fraud the state's accountings: True, but the difference was minimal (2.7% or so to 3.07% ...

Interested to know where those figures are from and how reliable they are. 2.7 % to 3.07 % is not exactly minimal (one seventh higher than target) but I agree that is not yet huge.

However, reports have indicated far higher actual deficits [0]:

"Greece estimated its 2009 deficit would be 12.5 per cent of gross domestic product, far above 3.7 per cent predicted in April. It revised its 2008 deficit up to 7.7 per cent from 5 per cent."

I don't agree that the troika would only care "about the deficit reduction and nothing else." I think a lot of people are trying to think how to do things without hurting the Greek people, but on the other hand, when money runs out, the money runs out. People who do pay their taxes - that are far higher than in Greece - are fed up, and that is going to show up in the upcoming elections, too.

[0] http://www.ft.com/cms/s/0/33b0a48c-ff7e-11de-8f53-00144feabd...

Re: Croatia just canceled the debts of its poorest citizens

#258

Post by seesomesense » Mon, Feb 02, 2015, 8:26 AM UTC

If I was a Croatian lender, I would immediately stop lending to the poor. Alternatively I would find a way to charge them very high interest rates to compensate for the risk of the government doing this again.

Re: Croatia just canceled the debts of its poorest citizens

#259

Post by ptaipale » Mon, Feb 02, 2015, 8:36 AM UTC

BSousa wrote: post #178

briandear wrote: post #174

Earlier quoted context omitted.

And why is Greece in bad shape? Mightn't the deficit and fiscal mismanagement be the problem? How else should they solve it?

There are various reasons, and I never said that it wasn't their fault they got into this mess. But lets not pretend it was ALL their fault. But independently of whose fault it is, there are two options: a) try to get to an agreement that can get Greece back into shape, even if it means postpone debt payments, restructuring, haircut, etc where it is beneficial for all parties b) continue to blame them for this situat…

> a) try to get to an agreement that can get Greece back into shape, even if it means postpone debt payments, restructuring, haircut, etc where it is beneficial for all parties

And that is what has been tried. Debt payment has been postponed a lot, there' been plenty of debt restructuring. Still, that is what Syriza now does not want to do.

Greeks are still paying less taxes (in proportion to their national income) than anyone else in the eurozone (except Lithuania, who adopted euro one month ago).

Re: Croatia just canceled the debts of its poorest citizens

#260

Post by ptaipale » Mon, Feb 02, 2015, 8:39 AM UTC

Sandman wrote: post #165

ptaipale wrote: post #145

Earlier quoted context omitted.

Just nitpicking one thing: > taxes are very high Doesn't seem so: Croatia's tax to GDP ratio is 26.6 %. Compare that to 46.8 % in Belgium, 43.4 % in Austria, 40.6 % in Germany, 45.8 % in Sweden. 26.9 % in U.S. which is internationally known as a low-tax regime. Surely some taxes are high, and taxation is not necessarily fair, but I'd say that Croatia's taxes overall are not high. I would also expect that the "black m…

What hurts people the most is VAT (Value-added tax), and Croatia has one of the highest VATs of all the EU countries [1]. The US doesn't have a VAT, but it does have a sales tax, which is pretty low compared to VAT in most European countries[2] [1] http://en.wikipedia.org/wiki/Value-added_tax#EU_countries [2] http://en.wikipedia.org/wiki/Sales_taxes_in_the_United_State...

VAT hurts, but not as much as taxing income. People do not like consumption taxes, but even with high VAT, they still consume, while taxing employment or corporate incomes hurts economies more because they have a stronger impact on economic activity.

Land value tax would be even better, because the land does not run away or stop working. How's that in Greece?