The Joys of Debt
A little while back, I saw a copy of A Free Nation in Debt: The Financial Roots of Democracy
lying around the office. Looked thrilling, but it also clocked in at nearly 600 pages—roughly sixty times the amount I can read without developing mysterious headaches and begging for mercy. Sad, but true. Fortunately, James K. Galbraith wrote a quick four-page review
of the thing, so we can see what the big deal is.
James MacDonald's grand unified theory of the universe, basically, is that democracies generally arise because countries go into debt when they need to fight wars and stuff. Historically, states have needed extra cash, so they go to the citizens, and since it's hard to borrow a lot of money and not give your creditors the right to vote, voila, democracy. Wealthy oil states need not apply. That's the nickel version.
It's an interesting idea. Might even be true. It does help explain why so many European states instituted suffrage after the first World Wars; they had to issue a bunch of war bonds to their citizens during the 1910s, after all, and couldn't well continue to suppress the vote. The theory also predicts that democracies will generally out-survive other forms of government, because, with readier access to credit, they have the resources both to fight expensive wars and invest in public infrastructure. And as Rabelais once pointed out, the grand thing about being a debtor is that people care a great deal about your well-being.
Galbraith likes the book, but wonders what will happen now that the United States government depends less and less on American citizens to finance its public debt, and more and more on China and Japan. "Can a country… be truly democratic if it is in hock to banks and foreigners?" That seems like an odd question, but maybe it will make more sense if I read the book.