The Credit Crunch, Austerity and Sin

Time off over half-term has meant the chance to relax and even, on Monday, the opportunity to go to a shop to buy a newspaper and then read it! What’s got me thinking this week has been the interview in Monday’s Guardian with the Princeton economist Paul Krugman (pictured above). Krugman has been appearing on various UK media outlets, promoting his new book, End This Depression Now! You can read his Guardian interview here, and also watch here his appearance last week on Newsnight.

Near the beginning of the Guardian article, we’re told of Krugman’s frustration with the many ‘Very Serious People’ he has met recently who are convinced of the need for governments to reduce deficits. ‘These Very Serious People present economics as a morality play, in which debt is a sin, and we have all sinned, so now we must all pay the price by tightening our belts together. They tell us the crisis will take a long time to resolve, and must inevitably be painful.’ Contrast that analysis with another Guardian article written a few weeks ago by the Irish journalist Mary Kenny, explaining the willingness of the Irish people to support the EU’s fiscal treaty. Kenny notes that 84% of the Irish population still define themselves as Roman Catholic, and then writes: ‘That, I believe, is one reason the Irish are not uncomfortable with the concept of economic austerity. "Austerity" is the due enactment of penance, following sin or self-indulgence. I've heard scores of people all over the country say: "A bit of self-denial will do us no harm at all. Sure, we went over the top altogether with mad spending."’

These articles raise important questions on sin, and where it’s to be found in the current debates on austerity versus Keynesian stimulation of the economy – watch Krugman’s interview on Newsnight and you’ll hear him suggest that debt and credit are not the worst of sins, but that it’s more offensive to sacrifice a future generation and their jobs on the altar of economic dogma. That observation is crucial because it helps move the debate beyond its current, skewed moral stance. The arguments for austerity are often framed in moral terms and delivered by a privileged elite who want to preach the virtues of hard work and thriftiness. Messrs Cameron and Osborne et al remind us constantly that we can’t go on living beyond our means, Christine Lagarde of the IMF (who benefits from diplomatic rules which means she pays no taxes) tells the Greeks it’s ‘payback time.’ And all these statements are framed within the wider narrative, that governments are bad and markets are good, conveniently forgetting the excesses of the banking system which brought all of us to our knees.

So maybe it’s time to reframe the argument on austerity and sin, to acknowledge that if our determination to pay off debt at all costs is going to close down the hopes of our young people and cause decades of suffering for poorer nations then we need to take a different approach. Of course, there is an even more radical solution which would offer all of us the possibility of a new start...

Imagine the implications of our leaders taking to heart these laws from Leviticus 25, legislating for the Year of Jubilee: ‘³⁹ If any who are dependent on you become so impoverished that they sell themselves to you, you shall not make them serve as slaves.⁴⁰They shall remain with you as hired or bound labourers. They shall serve with you until the year of the jubilee. ⁴¹Then they and their children with them shall be free from your authority; they shall go back to their own family and return to their ancestral property. ⁴²For they are my servants, whom I brought out of the land of Egypt; they shall not be sold as slaves are sold. ⁴³You shall not rule over them with harshness, but shall fear your God.’