Why You Shouldn’t Be Afraid To Talk About Finance
The following article is the first in a two-part series on finance and global poverty.
Illustration by Joel Rosenburg
Medieval Europe offered some of history’s most dramatic examples of inequality. At the time, the Catholic Church was Europe’s most powerful institution and the few who benefited from its power enjoyed wealth and luxury that feudal serfs and peasants couldn’t imagine.
At the center of the Church’s unchallenged power was illiteracy: all people recognized the authority of the Bible, but only a powerful few members of the clergy were able to interpret its words. The general population placed an enormous amount of trust in these few literate individuals, and ultimately, they used this power to amass wealth.
Today, we like to think we’ve learned the lessons of the Middle Ages. We value the separation of church and state, and global literacy is at an all-time high. But what about inequality? Next year, Oxfam International predicts that worldwide, “the combined wealth of the richest 1 percent will overtake that of the other 99 percent.”
Many who look to understand this incredible wealth gap are quickly lost in the exclusive language of finance. When it comes to the inner workings of financial institutions, the rise and fall of markets, the tangled web of international debt, or even just our own personal finances, most of us are lost. In short, we are financially illiterate.
Like the peasants of the Middle Ages, we are confused about some of the most basic forces that direct our lives. Because there are gaps in our understanding, we hesitate to speak out against the incredible inequalities facing our world. We begin to accept widespread poverty as an inevitable fact of life, rather than a result of economic structures that we’ve created.
In an article for Society and Space, geographer James Sidaway points out some of the metaphors we use when we talk about a financial crisis: “meltdown, earthquake, storm, and tsunami,” to name a few. He suggests that when we think of a financial crisis as a natural disaster, we miss some very important details – our financial systems are human-made, and unlike storms or tsunamis, they don’t treat everyone equally.
Global debt currently stands at $199 trillion, up an incredible $57 trillion since the crisis of 2007. Though governments, banks, corporations, and individuals are all subject to debt, some groups bear much heavier burdens.
- In the United States, women, minorities, families with children, students, and the elderly are the most impacted by debt.
- Student debt in the United States has reached an unprecedented 1.16 trillion dollars, much of which has come from predatory lending.
- The most common reason Americans cite when filing for bankruptcy is medical debt.
- Thousands have lost their homes to foreclosure in the financial crisis, and many are still pursued by debt collectors, often having property or income seized to continue paying debts on homes that were repossessed years ago.
For many, the lived reality of debt is crippling. “When the result is homelessness and more families without decent or secure shelter,” asks Sidaway, “should we not just call this a moral or a human crisis?”
We could ask the same question of economic crises around the world. The European Union, for example, has encountered economic problems of its own in the past few years. Member states have argued over who is to blame and implemented punitive austerity measures to restrict government spending, but the greatest impact has been on a human scale. Tight spending restrictions have resulted in massive unemployment and cutbacks to important public services. In countries like Greece, this has meant soaring rates of depression and suicide.
Meanwhile, severe limitations on public services are commonplace for developing nations, most of which are indebted to the World Bank or the International Monetary Fund. Restrictions are so tight for those indebted to the IMF that last fall, during the Ebola crisis, West African government leaders hesitated to spend money on public health until the IMF granted them special permission.
How might the epidemic have been mitigated or avoided if spending had been allowed for prevention and early treatment instead of disaster control? How different would life be in many developing nations if governments were permitted to spend more on the general welfare of their populations?
The details of finance are complicated, but we shouldn’t let that stop us from stepping back and recognizing what is simply unjust.
Taking Dreams Seriously
It’s unlikely that we’ll see a worldwide spike in financial literacy any time soon. Even if we did, we might never agree on what constitutes a fair economic or financial system. Still, we can’t accept conditions that deprive people and communities of their basic rights while we test abstract theories of growth. No matter what system we have in place we should all be able to agree that everyone deserves fresh food, shelter, clean water, education, and a healthy community. Our economy should serve us, not the other way around.
A growing number of organizations and political parties are trying to make this ideal a reality – organizations like Rolling Jubilee, which has found a creative way to cancel millions of dollars of personal debt for “pennies on the dollar,” and The Committee to Abolish Third World Debt which calls for “the immediate and unconditional cancellation of Third World debt” as well as an end to the kinds of restrictions imposed by the IMF.
In Europe, many new political parties have emerged in the past few years to resist austerity measures. One of the newest of these groups is Spain’s Podemos. The party has some dramatic changes in mind for the country, including a state-guaranteed living wage, a 35-hour work week, a mandatory retirement age of 60, and a citizen’s audit of public debt.
These groups and many others may have different methods, but they share a conviction that those pushed into the economic margins deserve better.
There are many who doubt the idealism of such movements – who believe financial and economic reform at this level will remain a dream. While speaking to a sprawling crowd of supporters in Madrid earlier this year, Pablo Iglesias, the charismatic leader of Podemos, offered his response to these skeptics:
“We are a country of citizens, we dream like Don Quixote, but we take our dreams very seriously.”
But does a dream like this stand a chance?
We’ll attempt to answer this question in part-two of Nourish International’s series on finance and global poverty later this month. To keep up, follow us on twitter.
Nathan Albright is the Community Discourse Coordinator at Nourish International