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2011-09-19

David Graeber: The Debt of the American Poor Should Be Forgiven

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As President Obama prepares to outline a deficit-reduction plan that includes tax increases, as well as cuts to programs such as Medicare and Medicaid, anthropologist David Graeber proposes a radical solution: cancel the debt of the nation’s poor. "Debts between the very wealthy or between governments can always be renegotiated and always have been throughout world history. They’re not anything set in stone," says Graeber, author of "Debt: The First 5,000 Years." "It’s, generally speaking, when you have debts owed by the poor to the rich that suddenly debts become a sacred obligation, more important than anything else. The idea of renegotiating them becomes unthinkable." [includes rush transcript]

Transcript

This is a rush transcript. Copy may not be in its final form.

AMY GOODMAN: Let me ask you about President Obama’s announcement of the Buffett Rule.

DAVID GRAEBER: Mm-hmm.

AMY GOODMAN: As we’re broadcasting now, he has not yet made that announcement. Chairman of the House of Representatives Budget Committee, Paul Ryan, was critical. He said higher levels of taxation on the wealthy would reduce job creation and investment. Ryan was speaking on Fox News Sunday.

REP. PAUL RYAN: If you tax something more, Chris, you get less of it. If you tax job traders more, you get loss job creation. If you tax investment more, you get less investment. At a time when experts are telling us, including, like I said, the fiscal commission, we should lower tax rates on investment and job creation by getting rid of all the loopholes, so we can create economic growth. So we think this is going in the wrong direction. Let’s not forget that under current law, that the President has already passed, the top tax rate on individuals and small businesses in 2013 goes to about 44.8 percent. So, we have employers here in Wisconsin that pay that tax rate, who are competing against countries that are taxing their businesses from like 16 percent in Canada, to almost 21 percent going in England, 25 percent in China. The world taxes their businesses at about 25 percent, and he’s saying we’re going to tax these job creators at above 45 percent with this new tax. What it does is it adds further instability to our system, more uncertainty, and it punishes job creation and those people who create jobs. Class warfare, Chris, may make for really good politics, but it makes for rotten economics.

AMY GOODMAN: "Class warfare." David Graeber?

DAVID GRAEBER: Well, generally speaking, when you hear a Republican talk about class warfare, you know they’re waging it. I think that the easiest way to put what’s going on in perspective is to think the situation in the '50s under Eisenhower, who was of course a Republican president, when tax rates on the wealthiest were actually 90 percent. I don't remember the economy freezing up and falling apart in the 1950s. In fact, it was booming. In the '60s, the same thing. We're not talking about some radical proposal. We’re talking about inching back, you know, a tenth of the way back to where we were when America was at its wealthiest. So I think that rhetoric is just completely false.

AMY GOODMAN: I want to go to Warren Buffett himself. Part of the White House deficit-reduction plan, aimed at ensuring people who earn more than a million dollars a year pay a minimum rate of tax that at least matches that of middle-class families, dubbed the "Buffett Tax," the proposal is named after billionaire U.S. investor Warren Buffett, who wrote earlier this year rich people like him often pay less in taxes than those who work for them. Well, last year, Buffett spoke to ABC News and dismissed Republican arguments that letting tax cuts expire for the wealthy would hurt economic growth.

WARREN BUFFETT: I think that people at the high end, people like myself, should be paying a lot more in taxes. We have it better than we’ve ever had it.

CHRISTIANE AMANPOUR: They say you have to keep those tax cuts, even on the very wealthy, because that is what energizes business and capitalism.

WARREN BUFFETT: The rich are always going to say that, you know, "Just give us more money, and we’ll go out and spend more, and then it will all trickle down to the rest of you." But that has not worked the last 10 years, and I hope the American public is catching on.

AMY GOODMAN: That was Warren Buffett being interviewed by Christiane Amanpour of ABC. This is Senate Minority Leader Mitch McConnell, Republican from Kentucky, speaking on Meet the Press Sunday, dismissive about the so-called Buffett Rule.

SEN. MITCH McCONNELL: If Warren Buffett would like to give up some of his benefits, we’d be happy to talk about it. I mean, I think that means-adjusting benefits is one of the ways that we’re going to have to solve at least the Social Security and Medicare problems, long term, for the next generations. With regard to his tax rate, if he’s feeling guilty about it, I think he should send in a check. But we don’t want to stagnate this economy by raising taxes.

AMY GOODMAN: That was Mitch McConnell. Your response, David Graeber?

DAVID GRAEBER: Well, I think the most obvious response is that this has nothing to do with economics at all. I think that for the last 30 years we’ve seen a political battle being waged by the super-rich against everyone else, and this is the latest move in the shadow dance, which is completely dysfunctional economically and politically. I mean, it’s the reason why young people have just abandoned any thought of appealing to politicians. We all know what’s going to happen. The tax proposals are a sort of mock populist gesture, which everyone knows will be shot down. What will actually probably happen would be more cuts to social services. The very fact that the rhetoric is about the debt, which is really a non-issue, is itself the problem.

AMY GOODMAN: What do you mean it’s a non-issue?

DAVID GRAEBER: Well, again, American debt has been much higher than this in the past, and American economy boomed. In fact, people turned to the debt as an issue when it became obvious that the real problems faced by Americans—the unemployment, most obviously, and the state of the economy—basically couldn’t be addressed by the political system as current—as it currently exists.

AMY GOODMAN: How should unemployment and poverty and inequality be addressed?

DAVID GRAEBER: Well, it has always been addressed in the past by further deficit spending, which will cause the economy to grow again, and then the money can be recouped. This has always worked in the past.

AMY GOODMAN: And so, how do you think President Obama is dealing with this?

DAVID GRAEBER: I think President Obama really has bought into the dominant ideology, which is essentially Republican. Finally, he has to wage an election campaign, so he has to make some gestures in the other direction, because he knows the overwhelming majorities of the American public are in favor of taxing the rich. And he also knows that it’s almost certainly going to be shot down. There’s nothing that the Republicans are less likely to put up with than a proposal like this.

AMY GOODMAN: David Graeber, talk about debt cancellation.

DAVID GRAEBER: Well, one of the things that I discovered in researching my book is that the kind of debt crisis we’re experiencing now, being a real debt crisis, which is a debt crisis that affects ordinary people, debts between the very wealthy or between governments can always be renegotiated and always have been throughout world history. They’re not anything set in stone. It’s, generally speaking, when you have debts owed by the poor to the rich that suddenly debts become a sacred obligation, more important than anything else. The idea of renegotiating them becomes unthinkable. In the past, though, there have been mechanisms, when things get to a point of real social crisis, that have always existed. And they vary by the period of history. In the ancient Middle East, often new kings would simply declare a clean slate and cancel all debts, or all consumer debts, commercial debts, between merchants were often left alone. The Jubilee was a way of institutionalizing that. In the Middle Ages, there were bans on interest taking entirely. There have been many mechanisms.

But whenever you have what I call a period of virtual credit money, when money is recognized not to be a thing like gold and silver, but a social relation or promise that people make to each other, which has become increasingly clear since the '70s, when we went off the gold standard—and I think 2008 really brought that home—debts can be renegotiated. They're not set in stone. Trillions of dollars of debt was made to disappear. We understand now that this is a political arrangement, and it can always be readjusted. And I think what the people coming to the squares—and Wall Street now included—are saying is that, well, if that’s true, if democracy is going to mean anything now, we’re all going to have to be able to weigh in on what sort of promises are made and what sort of promises are adjusted when you enter into a crisis.

AMY GOODMAN: We hear about debt cancellation when we’re talking about developing nations. What about the United States?

DAVID GRAEBER: Well, the interesting thing is that most of the developing nations have actually pulled themselves out of the situation. Structural adjustment has come home to Europe and America. I think it would be a great idea. I think it would bring home that we really are in a different age, that money doesn’t mean the same thing as it used to. And there are people who have tried it. Saudi Arabia, actually most dramatically, that was their reaction to the Arab Spring: they declared a debt cancellation. So there are precedents. I mean, they kind of don’t want people to know that they did it, for obvious reasons, but they did.

AMY GOODMAN: And the crisis now in Europe?

DAVID GRAEBER: The crisis now in Europe is an example of the same thing. The austerity regimes that are being imposed now on Europe and on America are remarkably similar to what happened—you know, what used to be called the Third World debt crisis. First you declare a financial debt—a financial crisis. You bring in these people who are supposedly neutral technocrats, who are in fact enforcing this extreme neoliberal ideology. You bypass all democratic accountability and impose things that no one ever possibly have agreed to. It’s the same thing. And one reason it’s happening to us now is that there was really successful mobilization around the world against those policies. In a lot of ways, the global justice movement was successful. The IMF was kicked out of East Asia. It was kicked out of Latin America. And now it’s come home to us.

AMY GOODMAN: I want to thank you for being with us. And how long do you expect these Wall Street protests, part of which you helped to organize, to continue?

DAVID GRAEBER: As long as we possibly can.

AMY GOODMAN: David Graeber teaches anthropology at Goldsmiths at University of London, author of several books. His newest is called Debt: The First 5,000 Years.

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