Tuesday, July 26, 2011

Perpetual Peace Preliminary Article IV and The American Debt Crisis

A few thoughts on the current state of American fiscal policy and Kant:

After seeing so much of the media frenzy I feel compelled to come back to my blog. A friend of mine, Scott, recently wrote on the debt ceiling crisis in his blog, and so it got me to thinking. As this little brain vomitorium is dedicated to Kant, I wonder what he would say about this whole "turn the world upside down and create pandemonium for the sake of a few stupid people" thing. Yes, I said it - stupid people. While the Michele Bachmanns may strike some as 'real Americans' with 'real American values', you will find no safe harbor for her or them here. The blatant and willful ignorance of this crowd will be the undoing of many... too many. In any event - here is a Kantian cheer to the Tea Partyers who cannot bring themselves to vote for a policy that will keep the world economy and millions of people safe and employed.

Kant's views about debt:

Well, we only have a few places where he talks about national debt, and the foremost amongst them is in Perpetual Peace. There he says in Preliminary Article 4:

4. "National Debts Shall Not Be Contracted with a View to the External Friction of States"

This expedient of seeking aid within or without the state is above suspicion when the purpose is domestic economy (e.g., the improvement of roads, new settlements, establishment of stores against unfruitful years, etc.). But as an opposing machine in the antagonism of powers, a credit system which grows beyond sight and which is yet a safe debt for the present requirements--because all the creditors do not require payment at one time--constitutes a dangerous money power. This ingenious invention of a commercial people [England] in this century is dangerous because it is a war treasure which exceeds the treasures of all other states; it cannot be exhausted except by default of taxes (which is inevitable), though it can be long delayed by the stimulus to trade which occurs through the reaction of credit on industry and commerce. This facility in making war, together with the inclination to do so on the part of rulers--an inclination which seems inborn in human nature--is thus a great hindrance to perpetual peace. Therefore, to forbid this credit system must be a preliminary article of perpetual peace all the more because it must eventually entangle many innocent states in the inevitable bankruptcy and openly harm them. They are therefore justified in allying themselves against such a state and its measures.

Or in more modern language:

4: ‘National debts are not to be incurred as an aid to the conduct of foreign policy.’


There’s nothing wrong with this way of seeking aid, within the state or from outside it, in support of the domestic economy— the improvement of roads, new settlements, creating reserve stores of commodities as insurance against unfruitful years, etc. But as a tool for use in the struggle of ·national· powers against each other, this credit system—the ingenious invention of a commercial people in the present century—is a dangerous kind of money-power. The debt it involves keeps growing, unnoticed, and the debtor state isn’t pulled up short by demands for repayment, because the creditors don’t all require payment at one time. ·And in time it grows to be· a war-chest bigger than those of all the other states combined. The only way it can get used up is through a loss of tax income [to pay the interest?]; that certainly will eventually happen, but it can be kept at bay for a long time because of the stimulus the credit system gives to industry and commerce ·and thus to tax revenues·. This ease in making war, together with rulers’ lust for power—something that seems inborn in human nature—is thus a great hindrance to perpetual peace. All the more reason why there should be a preliminary article of perpetual peace forbidding this credit system; and states that don’t use it are justified in combining against any state that does, because they will be harmed by their entanglement in that state’s inevitable bankruptcy.



So what does our illustrious teacher tell us? No. 1: National debts are, for the most part, off limits unless they are incurred for the common weal. That is, the general good of the public. But how have we incurred the debt we have? Was it to build roads? To buy up commodities for the 2012-ers who fear the end of the world? NO. It was to wage 2 wars. ENTER - Afghanistan and Iraq.

President G.W. Bush basically took our budget surplus and squandered it on breaks for his buddies, and wars that he felt were 'righteous'. Now, we are left with the economic fallout that is more deadly than a nuclear blast. Could Kant endorse this?


Again... a resounding NO. National debts are the backdoor way to undermine a state's freedom and autonomy. If this were purely an exercise in sticking to Kant's texts, we could judge that China's actions in the past 15-20 years of buying American debt has been such an example of a devious practice that Kant warns us about. Indeed, the notion that much of America is now owned by the Chinese is just the leverage and 'war chest' that China hopes to gain. However, this current crisis is even worse than that. Kant had no way of knowing that the international economy would become so intertwined that such a shock would mean devastation to all. He certainly hoped for global interconnectedness via trade -- as a mechanism for peaceful relations -- but this is not about choosing not to go to war against another country because both countries hold similar or close economic ties. This is a situation where a few myopic individuals are holding the world hostage -- and many people's pensions, livelihoods, and...lives hostage because of their narrow self-interest and ideological delusions.

If Kant could not endorse the actions of China in buying U.S. debt to hinder its freedom and autonomy, then Kant, I think it safe to say, he could also not endorse the actions of a small fraction of U.S. representatives and senators, all of whom are attempting to play chicken with the world economy, as the result is that all states' economic well-being and freedom would be undermined. So, Mr. Boehner, if you happen to be listening---

Do the right thing and not solely the right-wing thing, and make an adult decision and compromise.

I think Kant would praise that.