The Plagues of Debt and Deficits

With the sudden shock of Covid-19, almost all economic activity locally and globally had ceased after February 2020. Only now towards the end of May 2020 have some countries decided to carefully open up businesses, economies and society in returning to normalcy. Much of the idea of a return to normal is linked to the views of how some believe the post pandemic world can and will operate. The reality is that this pandemic was not the first, and will not be the last. In many parts of the world, economic collapse and crisis is almost a generational plague, with each new generation facing their own dilemma and recovery over many years. What many in regions like Latin America, the Middle East, Africa, Asia and Eastern Europe have experienced may come to pass in Western nations, that is, if they ignore the experiences of these other regions since the end of the Second World War.

The post war German economy survived the near total destruction of German infrastructure and society with intense aid for allied countries in order to build a strong Germany as a bulwark against the Iron Curtain. The progress of Germany since the 1950s has been remarkable, even though the country was left in ruins post 1945. Regions like Latin America that never received a sustained and focused bail out after the Great Depression in 1929 were plagued with generations of debt, accompanying corruption and even government sponsored terror. In the early part of the 20^th Century, countries like Brazil and Argentina received as much immigration from the South of Europe as did New York. Some of the reasons for this was that Argentina was in better shape economically than Italy was at the beginning of the era. With the arrival of the Great Depression, the recovery of Argentina and much of Latin America never enabled Argentina to become more prosperous than any Western European country ever again. Much of the regions was plagued by debt, low growth, overspending and corruption, problems that have existed for generations.

With many Western countries now being challenged by a possible era of Depression and massive debt, it is important that the lessons of these other regions ring loudly in the application of policies to get all countries out of this economic crisis. Support for citizens require funds to be used liberally, but for a set period of time. Political advantages should not be taken in the middle of a Depression, and using absolute powers given to many governments to push their agendas will absolutely corrupt any democracy. Hiding or blurring information about how much money has been used should be considered criminal, as it will hurt the lives of average citizens and disadvantage the poor and middle class. The absurdity of giving raises for politicians or public sector employees, or adding additional taxes during a Depression is also cruel, and a clear sign of a government that represents the 1%, the takers, and not the producers in a society. Any actions that may limit PPE, medicine, food and general health for citizens should be strictly addressed. Without foresight and the diminishing of congressional or parliamentary powers, generations of debt and corruption will absorb otherwise healthy democracies. Hundreds of years of civilization gave us divided power and full rights, it can all be lost within a few years. A charter enshrining these values is likely needed, with no caveats or preferences given to any group in society. Weak societies who do not take actions now to preserve their representatives and democracy will surely lose it.

The post The Plagues of Debt and Deficits appeared first on Foreign Policy Blogs.