I was just reading a translation of the interview of Thomas Piketty by Die Zeit. Really excellent discussion with many gems to contemplate both economically and morally. One moral principle that has been on my mind lately Piketty laid out perfectly:
“We cannot demand that new generations must pay for decades for the mistakes of their parents.”
I generally agree with that, particularly as it applies to the average-citizen. When thinking about what obligations to society someone born into that society should have at birth, the answer ought to be none, which I believe to be generally accepted. However, I do believe we, socially and economically, haven’t thought enough about the natural extension of that principle: Does a person bear an obligation to society when they gain exceptional benefit from that society? Particularly in terms of exceptional wealth and income which are built on not only the markets provided by that society, but also the collective intellectual property and knowledge accrued over countless generations. Not to mention the society that raised them. Any sociologist can tell you the “self-made man” is a myth, no one is successful without their society.
If you agree that people bear some amount of debt for the exceptional benefits they’ve gain from that society, it’s also worth testing with the inverse: society should bear an obligation to those that suffer exceptional loss at its hands. This rings true to me, and is the basis for a good deal of social policy, particularly within the arena of “safety nets”. On that note it’s also worth exploring the concept of reparations for African-Americans, as persuasively argued by Ta Nehisi Coates.
But getting back to the individual’s obligation on national debt. A person does benefit from the improved economy that was (at least partly) due to money lent to previous generations. How should that benefit be paid for? The degree that each individual benefited seems most fair; paying for what we gain is generally accepted as just. For national debts, calculating what an individual gained from previous foreign investment is currently infeasible, but Piketty’s suggestion of a tax based on wealth would be roughly commensurate. Those individuals/families that have gained great wealth over that period are likely to have had a portion of their successes due to the foreign infusion of money.
If that tax was graduated progressively, and dynamically adjusted to the length and dept of the debt, it could approach a morally fair way to pay off a national debt.
This is entirely setting aside the utility of such a policy, which I think would work for the good. Those with great wealth, already holding the levers of power in most developed countries, would have greater incentive for balancing budgets and only opting for debt when it would be worth the investment, not merely spending indulgently today with a vague thought of eventual reconciliation.
It may not be politically feasible in most of the indebted world now, and Piketty may well be right about the need for a EU conference on debt, but morally I think the connection between individual wealth and national debt has legs.