Just as banks are tested by standards different from those they apply to their customers, so are countries that owe a great deal of money, like Greece.
How “healthy” are the largest banks? If derivatives are not considered as part of banks’ assets (Fed), then they can withstand another financial crisis without bailouts (with 13% capital); accounting practices of the FDIC claim that they cannot (with only 5%).
While our political leaders and the moneyed elite espouse conservative ideals of small government, you can readily find them courting military contracts (of big government spending, if not waste) and prohibiting the laissez faire market forces of recreational marijuana sales, infusing government control.
What about endorsing the proliferation of houses of ill spirit (if not ill repute) in the center of downtown because of sales revenues, while responding to their dangerous prospects with the surveillance of street cameras (Big Brother).
Pointing out these kind of inconsistencies may seem like sound medicine, but as many scholars remind us, facts seldom change beliefs. So, what does?
Perhaps a trauma or a crisis, the kind that shakes the very foundation on which such beliefs rest. The imminent threat of a Greek default on its Eurozone debt provides a good case study.
The so-called cradle of democracy, Greece, has a population of 11 million and an annual GDP of about $240 billion. By comparison, Colorado has a population of around 5 million and an annual GDP larger than $270 billion.
With over $300 billion in foreign debt, Greece is rumored to be on the verge of default. All the questions about the adverse repercussion of a default—from creditor-banks and their respective government guarantees to a potential exit from the Eurozone—may miss some moral issues related to this situation.
To begin with, as David Graeber (2014) reminds us, the very notion of debt is bound by two unrelated moral principles. One has to do with the obligation one ought to feel about repaying borrowed money, and the other is that lenders of money are considered inherently evil.
Those who fail to repay what they owe are then considered evil. How do we view individuals who take out mortgages and default on them, or those filing for personal bankruptcy to wipe clean their debts?
But by the same token, we also consider lenders to be evil, whether under the influence of Jesus’ condemnation of the money-changers in the Temple, or more recently the bailout of banks who gambled foolishly and received taxpayers’ help.
In local communities like ours, the very notion of public works of any sort, like the City of Champions, is considered problematic (evil?) because public debt may saddle the community with additional taxes. But what if debt is labeled investment? Will the next mayor go on record in support of such investments?
The Greek case study is much more complex than we are led to believe from sensational headlines that ensure the volatility of the stock-market (where brokerage firms enjoy the ride).
If we remain on the moral level for a minute, we should ask whether or not one country has a moral duty to help another? Though philosophical in nature, the answer is commonly couched in practical, utilitarian terms: yes, as long as it can afford it.
The Greek government, says Frank Jordans (AP), is reminding the German government—its largest creditor—that after WWII Greece was among 22 countries that agreed to halve Germany’s debt (1953).
More concretely, Greece has definite reparation claims against Germany from its WWII occupation of Greece: billions of euros worth of infrastructure destruction, millions of euros as compensation for massacres of resistance groups and Jews, about $7.7 billion of an interest-free loan made in 1942. This isn’t an exhaustive list.
So, who is the debtor and who is the creditor? On balance, who owes whom how much? Is there a moral injunction for aid among nations, even when it’s called debt?
The Germans, leading the Eurozone’s claims against Greece, insist that it’s the moral failings of the Greeks, as individuals and as a society, that have contributed to their current crisis: lazy tax evaders who expect the state to spend more than it can afford.
This systematic irresponsibility has raised the question every parent asks: should I enable bad behavior? If I punish, will I lose my child?
And punishment is expected in the Greek case, from austerity measures that hurt the poor to leaving the European Union, the kind of punishment our local leaders inflict on young entrepreneurs who haven’t made it yet to the top.
Can a small local startup expect the same royal treatment reserved for the military-technological complex? What will the next mayor do?
Raphael Sassower is professor of philosophy at UCCS. He can be reached at firstname.lastname@example.org See previous articles at sassower.blogspot.com