The Real Predators

Over at the "Progressive Christian" (an oxymoronic term, if ever there was one) hangout, Elizabeth Palmberg renews the old "Jubilee" movement's call for debt forgiveness for poor nations. The Jubilee movement has intuitive appeal on its side, just as it did more than a decade ago when I first encountered it in college. (There is nothing new in the "progressive" movement, only old ideas dressed up as new ones.) No Christian wants to keep poor, oppressed peoples under the bondage of debts they cannot hope to repay. And if the choice were actually between freeing developing nations from their debts and forcing them to pay, debt forgiveness would make sense. In this case, however, as in so many others, the Accommodators are impervious to the reality of the situation.

Impressively, Palmberg manages to slip two canards into her post. She begins with the irrelevant howler, "The subprime mortgage crisis in the U.S. has raised just outrage at the behavior of predatory lenders." This is another of those casual defamatory presuppositions buried in a related assertion as a given, at which the Accommodators are so skilled. Which lenders behaved in a predatory manner? How did they behave? Palmberg doesn't say, because she can't. The fact is that borrowers, especially poor borrowers, benefitted from the subprime lending frenzy. Borrowers obtained loans they had no business acquiring, which enabled them to purchase homes they had no business purchasing. When rates continued to rise and home prices fell, the cards collapsed and subprime borrowers returned to the position they occupied before the fiasco, living in residences for which they have the means to pay in full.

Indeed, the evidence is mounting that borrowers hoodwinked lenders at least as often as lenders took advantage of borrowers. The FBI is now buried under a massive pile of mortgage fraud investigations.

Back to the Jubilee plea. Palmberg advocates for forgiveness of loans, "often the result of Cold War favors to corrupt dictators," which cannot now be repaid. Two questions appear not to have occurred to her. First, why can these countries not repay the loans? The fact is that many, if not most, of these nations remain poor not because of usurious loans but because of terrible leadership. No rule of law, no protection of private property rights, and expenditures for the comfort of the privileged elite rather then desperately-needed infrastructure, all hold these nations back. Loan forgiveness would merely reward the very same bad behavior that harms the people Palmberg wants to assist.

Second, who will benefit from loan forgiveness? Palmberg assumes that, now freed from their dictatorial Cold War leadership, the people of poor nations will experience the direct benefits of loan forgiveness. However, she ignores the facts on the ground. Most of the nations saddled with these loans have exchanged one dictator for another, and that one for the next, in a continuous succession. In those nations, loan forgiveness would accrue not to the benefit of the people but rather only to the benefit of the regimes who oppress the people.

So, loan forgiveness must be taken on a case-by-case basis. Which nations are good candidates? Palmberg appears not to have considered this question, either. Does she mean Zimbabwe? Uganda? She specifically mentions Zaire, now known as the Congo. The Congo is hardly a compelling case study. Burdened with periodic conflict and self-absorbed leadership, the Congo, like many African nations, makes the case against loan forgiveness a no-brainer.