"J Burns" wrote in message news:mnfnpg$ag2
fascinating stuff snipped about runaway slaves
Whether or not Dunmore was sincere, my ancestor sincerely intended to
free the slave when he learned the craft. He knew that except for menial
tasks, a productive relationship with labor required the incentive of
pay. Jefferson and Lee couldn't make ends meet because they didn't
understand that.
That's an interesting observation and it's something that's at the heart of
the switchover from socialism we're seeing in China and the former USSR
countries. There have to be incentives built into any *successful* economic
system. Your comment reminded me about how incentives are also at play in
Greece:
Germany, in fact, understands moral hazard backward. The standard
definition refers to lenders; covering their losses will encourage them to
make bad loans again. And that is, let us not forget, exactly what Europe’s
creditors have done. Their financial assistance to Greece was deployed to
pay back German, French and other foreign banks and investors that held
Greek debt. It did Greece little if any good.
Greece has done little to address its endemic economic mismanagement. But it
has few incentives to do so if the fruits of economic improvements will flow
to its creditors.
http://mobile.nytimes.com/2015/07/08...in-greece.html
Even if the Greeks managed to magically bring their economy up from the
basement to the level of the German economy, the benefits would flow to the
lenders, not the Greek people. If I were Greek, I wouldn't feel very
motivated to pay off loans that never should have been made in the first
place. All those loans did was postpone the day of reckoning.
Another editorial I read today said that in very many cases in the past
where sovereign debt threatened economic collapse, debt forgiveness (of a
pretty massive nature) was the only strategy that actually worked. The
Germans know this - they got enormous debt forgiveness after W.W.II but they
seem unwilling to remember or offer the same grace to others.
http://mobile.nytimes.com/2015/07/08...in-greece.html
Nobody should understand this better than the Germans. It’s not just that
they benefited from the deal in 1953 [an agreement that effectively cut the
country’s debts to its foreign creditors in half], which underpinned Germany
’s postwar economic miracle.
There's another lesson from sovereign default: Twenty years earlier,
Germany defaulted on its debts from World War I, after undergoing a bout of
hyperinflation and economic depression that helped usher Hitler to power.
It's a time-honored variation of the famous "I got mine and I am closing the
door behind me" principle, it seems. What's scary is just how often the
"moral hazard" claim extends these economic disasters which are finally
cured by massive debt forgiveness. The delays in getting to the tough
medicine invariably make the patient sicker.
--
Bobby G.