A Systemic Debt Payoff Policy. Issue 2 (3rd April 2018)

• Record Type: Journal Article
• Authors: Wunder, Timothy
• Is Part Of: Journal of economic issues. Volume 52:Issue 2(2018)
• Page Start: 490
• Page End: 497
• Publication Date: 2018-04-03
• Subjects: debt forgiveness -- debt jubilee -- household debt -- insolvency; D10 -- H80 -- P16; Economics -- Periodicals; Economics; Économie politique -- Périodiques; Economie; ECONOMICS; ECONOMIC POLICY; Periodicals; 330.05
• DOI: 10.1080/00213624.2018.1469928
• Languages: English
• ISSNs: 0021-3624

Abstract

Abstract: The average family in the US takes on debt to buy homes, to get education, and sometimes to even pay for normal daily expenditures. Outstanding debt generates a stream of rents to creditors and has become a significant burden on many households. A policy of household debt forgiveness could increase both economic equality and individual liberty. Under what conditions might such a policy be socially acceptable and what would be the implications of such a policy? For debt forgiveness to gain social acceptance the U.S. population would have to perceive the policy as fair and believe that such a program would treat all households equally. Furthermore, any such policy would be politically impossible if it stripped asset owners of money due or would not substantially lower household debt levels. This article explores some possible parameters that a politically feasible policy would contain, and it offers an estimate of policy costs.