I am very honored to be able to share with you that my new book, The Case for a Debt Jubilee, is now available. The purpose of the book is to explore ways to reduce the burden of student and other household debt, and to explain their underlying causes and trends.
We were drowning in record levels of debt before the COVID-19 crisis, and we are now deluged in it. U.S. private-sector loans have tripled relative to income since 1950 -- and government debt is also at an all-time high. Soaring debt burdens individuals, stifles growth, compounds inequality, and brings falling living standards for millions.
Contrary to mainstream assumptions, we cannot simply hope that the trend will correct itself. Mounting debt is a feature of our economic system, not a bug: Debts perpetually grow and compound, polarizing and impoverishing economies if not overtly dealt with.
In the book, I put forward ideas I believe could free millions from modern-day debt peonage, reduce inequality and bring new vigor to the economy.
Notably, I’ve tried to put this in the context of the ancient debt amnesty or “jubilee,” those extraordinary moments when the kings of these ancient civilizations would proclaim forgiveness for household debts. Here’s an excerpt from the beginning of the book:
“In many of the most prominent ancient civilizations, including ancient Sumer, Babylon, Assyria, Akkadia, Egypt, Sparta, Corinth, and China, excessive household debt was a huge and recurring problem. This may come as a surprise to a reader today, because ancient societies are often misleadingly described as barter-based. In fact, debt was a necessary and pervasive part of these earliest economies, and our ancient ancestors quickly developed a sophisticated understanding of debt and lending, with laws and institutions to govern that lending. Debt did then many of the same things that it does now: it facilitated payment for labor, allowed for the acquisition of supplies, and bridged the time between planting and harvest -- the reaping and then the sowing of profit.
"Some families in these agricultural societies would find themselves with little option but to amass debts in order to live, but in time the burden of this debt could cause them to lose their land, their means of sustenance, and even their liberty, in the tragic form of debt bond servitude. … Interest rates were high and lenders quickly learned the power of compounding. Bouts of disease, drought, war, or other disasters often exacerbated citizens’ debt burdens. These ancient economies would sometimes reach the brink of collapse under the staggering weight of private indebtedness.
"For this reason among others, kings devised the practice of debt forgiveness or amnesty as a solution. A king might proclaim a debt amnesty for a number of reasons, as we will see, including to ensure that citizens were available to serve in his army and help build the great public works of that society. At first, historians were surprised to learn of this phenomenon, but archeologically documented instances of debt amnesty are numerous and growing, and refer to actual, and fundamental, debt practices in these cultures. In fact, some historians view this practice as conservative, counterintuitive as that may sound, since it was a mechanism that both preserved the practice of lending and kept those loans from overwhelming these economies.
"A key Old Testament passage, Deuteronomy 15:2-3, describes clearly the time when these debt amnesties were proclaimed: 'Every creditor shall cancel any loan they have made to a fellow Israelite. They shall not require payment from anyone among their own people, because the Lord’s time for cancelling debts has been proclaimed. You may require payment from a foreigner, but you must cancel any debt your fellow Israelite owes you.'
"Just as lending is almost as old as civilization, so, too, is predatory lending. The modern Rabbinical scholar Jacob Milgrom writes in Leviticus 17–22 that King Urukagina of Lagash (c. 2400 BCE), one of the first enactors of debt amnesty, saw that 'officials stole property and land from citizens, forced them to sell their houses, demanded exorbitant rates for essential services, [and] imposed unjust taxes. Impoverished farmers and artisans became indentured servants.'”