It is time for a global Debt Jubilee: Part II
In Part 1 of this series, I examined the rationale behind a global debt jubilee. In brief the argument ran like this:
- Debt lies at the center of our global monetary/economic/political meta-system
- This system is inherently unstable and is reaching a terminal stage
- Some method of addressing the unstable levels of global debt is necessary
- An appropriately crafted debt jubilee can resolve the problem of global debt as part of a minimally disruptive transition to a much more stable and generative system.
This last part is crucial. The reason for a debt jubilee is not debt, per se. Debt is the symptom of a much deeper problem: namely that across the globe, money and power have coagulated into a highly dysfunctional defacto oligarchy.
After decades of infection, this oligarchy has thoroughly corrupted our current social operating system leaving us with:
- The conversion of the global economy into a wealth extraction machine — and an explosion of wealth inequality;
- A disoriented, confused and dysfunctional collective intelligence — and ineffective political and governance institutions;
- The comprehensive delegitimization of our social institutions — and the collapse of our social capital.
This corruption has gone unchecked for a long time and runs deep. So deep, in fact, that it is likely that our current social operating system has been fully exploited by the money/power oligarchy. In other words, we have little to no hope of solving the problem using existing tools — and time is running out.
In the light of this logic, we find ourselves faced with a major set of challenges. We need a complete reboot of our social operating system. We need to do this with as little disruption as possible. And it needs to result in new tools that are capable of really addressing all of the challenges of the 21st Century.
This is the deep why of a global Jubilee. Because our system is tied to an unstable foundation of debt, it is vulnerable to a Jubilee. And, if constructed and executed thoughtfully, a global Jubilee can catalyze a transition to a much more stable and generative system.
Any approach that tries to “deal with” our debt without going deeper and delivering fundamental structural changes is worse than a distraction.
The danger of a false jubilee
Over the next year, the wheels are going to start falling off the global bus as the downward cycle of financial, economic and political dysfunction accelerates. As the crisis progresses, the money/power will ultimately be forced to resort to what might be the last tool in any form of plausibly legitimate toolkit: an idea that is already beginning to be sold to mainstream consciousness as “Quantitive Easing for the people”.
Long ago the monetary guru Milton Friedman proposed a novel form of monetary policy cheekily nicknamed, “helicopter money.” While practical implementation of helicopter money can be somewhat complex, the basic idea is straightforward: create new money and give it directly to the people (i.e., drop it out of a helicopter).
The thinking behind “QE for the people” is that if you really want to stimulate the economy, the best way to do it is to put money directly in the hands of folks on the street.
You see, over the past eight years, the Federal Reserve has endeavored to stimulate the economy through a few different approaches to “QE” and has spent somewhere in the neighborhood of $3.5 Trillion in the effort. Because their approach hasn’t been “directly to the people,” their efforts have really just put that money in the hands of banks and the people closest to banks (i.e., the “1%), without having much stimulus effect on the economy at all.
If they had taken the “helicopter money” approach instead, the past few years of QE would have resulted in about $30,000 of new money being deposited in the bank account of every household in America. That is a big chunk of change and there is little question that cutting a check for thirty grand to every household in America would move the needle.
In fact, something like this would feel really good all across Main Street. Whether the money is used to pay off debt or to buy a new car, it would make most people feel pretty great. And it would almost certainly juice the economy — higher revenues for corporations, more jobs for workers, the works.
It would feel like a Jubilee.
But it is not. In fact, it is the very opposite — a bacchanal. The “helicopter money” approach to debt is akin to trying to solve your amphetamine addiction by switching to meth. It doesn’t fix anything — it only leaves us more deeply addicted to a system that is controlled by the money/power.
QE for the people is a perverse doubling down on the current social operating system. Rather than breaking the stranglehold of the oligarchy and laying the foundation for a new more stable and generative system, it reinforces this power while perhaps removing our most powerful and important instrument for change.
If the tool of a truly change-focused Jubilee by our own hand and of our own will is taken from our toolbox, the paths toward a hopeful future are greatly narrower.
And so, if you take away anything from what I’ve written over the past year and a half, when you hear talk of “QE for the people” or a debt jubilee based on this approach, be mindful: the choice between a false jubilee and a real Jubilee may be one of the most important moments of our age.
What does a real Jubilee look like?
A properly constructed debt Jubilee must really be a “reboot”. It must do more than merely stimulate the economy, or even “reset the debt.” It must use the energy of a Jubilee to liberate us from the constraints of the current social operating system, unlocking our collective intelligence and activating underutilized or poorly deployed resources. It must result in the formation and adoption of a new social operating system that is capable of meeting the challenges of the 21st Century.
What does this look like? Here are what I think are the parameters of a right answer:
Money must be completely decoupled from debt. This means both that the legacy consequences of debt-based money must be ameliorated and that a new monetary system must be put in place that efficiently and effectively does what money needs to do in a well functioning economy.
This means, among other things:
- Reinventing money. Jim Rutt has an excellent proposal here for a new monetary system entirely decoupled from banks and debt; and of course the blockchain community has been actively experimenting with dozens of new approaches.
- Reconstructing finance and how we run the economy. Stephan Tual provides good insight into the potential of the Ethereum platform here and Steve Keen has some good thoughts on finance specifically here.
- A Basic Income. Scott Santens has been doing excellent work here.
The current stranglehold of elite influence on political power (in all of its many aspects) must be completely broken. Sovereignty must be returned to the people and new institutional forms must be developed that deliver on the necessities of governance at all levels while being intrinsically resilient to various forms of capture and corruption.
- Huge work is being done here and implementations of various flavors of “liquid democracy” and “eDemocracy” are playing a big part in the rise of new political parties in Europe.
- Going farther, the people at places like BitNation are actively going beyond new forms of governance to prototype new forms of sovereignty. After all, the real life of the digital age is not bounded by geography. Why should governance be?
All mechanisms of bad faith discourse, be they commercial, political or intellectual, must be rendered ineffective and their practitioners made to bear costs that make resorting to bad faith discourse irrational. New forms of information sharing, deliberation and truth seeking must be implemented that intrinsically reward good faith participation and extinguish bad faith defection.
- As our information environment overwhelms legacy channels like Television and Newspapers, new approaches to the attention and reputation economy are beginning to “select-against” bad faith discourse and upregulate only that which is actually helpful and useful.
Finally, Forgiveness. One of the many consequences of our old social operating system and in particular its perversion and capture by the oligarchy has been a vast injustice on a global scale. There is no way to resolve this injustice, no way to balance the scales or provide revenge or retribution. There is no path forward but forgiveness. For those who commit to the Jubilee, there must be a commitment similar to the Truth and Reconciliation efforts in Argentina and South Africa. So long as the fundamental structure of the new system is likely to be just. So long as the new world is likely to deliver systemic justice, we accept that past injustice is in the past.
These are what I believe are the fundamental parameters. Does this sound like a herculean task? Indeed this is far beyond QE for the people, the “rolling jubilee” or even the sort of global jubilee called for by David Graeber. But, if my read is correct, this is what a “minimum viable Jubilee” really looks like. The good news is that it is not impossible. In fact, looking at many leading edge trends in the world, there is a decent chance that we could actually pull it off.
And just how we might go about doing that will be the subject of my third and final post in this series.