We hear much of cancellation of student debt. While a worthy effort, not much thought has been given to its implications. And I do not mean economic implications alone. Let us start with a brief examination of a few social implications.
Social Implications
When you give special treatment to any segment of society, you inevitably segment society into pieces—and you automatically sow seeds of destruction. You set one group against another.
No. You should not do that. Are not people whose mortgages are “underwater” deserving of such equitable treatment as cancellation of their debts? One can argue that they are more deserving because, while students knew they were incurring debt with the accumulation of interest, and compound interest, mortgage holders did not know that “the Market” would cause a collapse of the value of their houses.
No. You cannot be the judge of who is “more” deserving than the other.
Worse. Are you saying that some are “first-class” citizens? Who is to judge?
Political Implications
When you set one group against the other or even more simply temporarily you set one before the other, you are destined to fail politically. To win such awesome social and political battles as cancellation of debts on a systematic basis, you need the broadest possible coalition of citizens. To select one group for “preferential treatment” is politically self-defeating.
Theological Implications
Moses and Jesus, as they so evidently did, invoked powers of a higher order when they advocated the cancellation of debts. The Israelites had such wisdom to implement Moses’ recommendations, and so did many Kings and Emperors over the years upon installation. As Transcendentalists, New Agers, and Mystics of all ages and traditions have always known, we have to be in the same spirit to win. The program of cancellation of debts has to be our common goal; it has to be a systematic program.
Above all, it has to be designed to benefit the entire population.
Financial Implications
Paolo Uccello, a Florentine painter of the Quattrocento, seems to have been so in love with the newly discovered prospective that he would abandon his conjugal bed in favor of practicing with and proclaiming the beauty of the new tools. Unfortunately, there is no similar anecdote to diffuse the importance of double-entry bookkeeping, an invention by Luca Pacioli, a Tuscan Franciscan, at about the same time. But the science of finance has had, and might still have, deeper implications for humanity than the exploration of the perspective.
The Beauty, Truth, and Goodness of Double-Entry Bookkeeping. Double-Entry Bookkeeping is a construction of beauty. This is a self-evident characteristic. What is not generally emphasized is that this technique allows us to discover the truth about personal, corporate, and governmental affairs. As such it has done and can do much good to humankind. But, like any tool, just as it has the potential for good it can also be used to commit much mischief. The biggest mischiefs are those allowed by economists with their fictitious construction of externalities. Mother Earth suffers most from this lie: If you look at the world as a whole, you discover that there is no such thing as an externality.
Recently, very recently, I made a discovery that might set straight a few millennia of abuse of the lender: The lender, I discovered, is not a hoarder. And then the function of interest, as Keynes intuited, interest as counted in accounting books, became utterly clear: Interest is the reward of not hoarding.
Would the world be better off if people with extra money in their pockets were to hoard their financial assets?
This is a question too deep to explore in these lines. It is the reverse perspective that is of interest at the moment. Much bookkeeping is built on the addition and subtraction of zeros. If you add them—or subtract them—systematically, you do not affect human, substantive relationships one iota. People are just as “rich” as they were before.
If we build on this simple verity, we might avert the impending disaster that is ready to engulf us in a sea of indebtedness. Zeros have been compounded so fast and furiously that we cannot grasp them any longer. If we grasp them by the tail, and systematically reduce them on a recurring cycle every seven years, as Moses advocated and the Israelites were wise enough to put into action, we will all be that much richer together.
If not, we will likely plunge into an abyss with no light in sight.
How Can We See the Light?
Just as recently as the last few days, I believe I have seen a ray of light out of the current morass. With a new twinkle in my eye, I have lately suggested that the Federal Reserve System, and all other Central Banks of the world, can set—anew—our financial fortunes on a steady and just path if they create a new monetary unit for us. Offering a nod of approval to Keynes, I have suggested that our Central Banks ought to create the American Bancor, the Swiss Bancor, the Russian Bancor, the Chinese Bancor.
The prerequisite is that the new currency be issued following three rules recommended by Concordian monetary policy. New money should be created as a loan:
- only to create real wealth of tables and chairs, not to purchase financial instruments;
- to individual entrepreneurs, cooperatives, corporations with ESOPs and/or CSOPs in their constitutions, and public agencies with taxing power so that the loan can be repaid;
- at cost.
Toward a World Without Reserve Currencies
If the new money is created on the basis of identical rules all over the world, there will not be any need for reserve currencies. With the help of today’s computers, we will know the respective value of each currency at each instant in time. A fundamental condition for mutual respect will thus be established among the nations.
Trade wars? Why trade wars any longer?
Toward a World Without Fear of Crashes
If the flow of new money is directed toward Main Street, let the crash of the financial system come. The sooner the better. No damage will be done to the real economy.
The behemoths of international finance will collapse. They periodically collapse because their design is structurally unsound: Infinite debt does not exist. They should no longer be artificially revived with the taxpayer and bank depositors’ money.
Few jobs will be lost—at no damage to anyone. Those who want to enjoy retirement, they can; they have accumulated the means to live comfortably. Those who want to start the business of their dreams, they have the knowledge to do so: provided they will create new real wealth, the “new” money will be available to them as well as to any other entrepreneur. Those who might want to remain in the banking business, they only need to inform local banks of their availability.
Economic Implications
What are the economic implications of winning the struggle for the systematic, continuous cancellation of debts, as Moses advocated and Jesus in the Our Father singled out? The result is going to be as revolutionary as anyone has ever dared to dream. The systematic, periodic cancellation of debts is going to create economic freedom for all on earth; the creation and distribution of money along sacred principles of justice will allow us to create all the real wealth that we individually need.
We shall then no longer be blind followers of the “dismal science”; rather, we will be happily practicing The Economics of Jubilation.
ABOUT THE AUTHOR
Carmine Gorga is a former Fulbright scholar and the recipient of a Council of Europe Scholarship for his dissertation on "The Political Thought of Louis D. Brandeis." With a book titled The Economic Process and a series of papers, Dr. Gorga has transformed the linear world of economics into a relational discipline in which everything is related to everything else, This characteristic of Concordian economics has been recognized by JEL in December 2017 (p. 1642). He was assisted for 27 years by Professor Franco Modigliani, a Nobel laureate in economics at MIT. For a full understanding of Concordian economics, Gorga has gradually realized that we need to go beyond Individualism and Collectivism, toward Somism (men and women in the social context)—see www.somistinstitute.org—and then we need to pass from Rationalism to Relationalism: see www.relationalism.org. See also Wikipedia and Google Scholar.
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