Odious Sovereign Debt

MirrorField asks, with regard to Author’s Note: Sovereign Debt:

If this is the case, I’m left to wonder on their opinion on the concept of “odious debt”, ie. debt incurred by government *not* representative of it’s constituents. Basically, do the eldrae believe that it’s a-ok to hold joe average responsible for debts run up by government he didn’t support (and possibly actively worked against)? Or is it a simple credit risk associated with lending to dictators? Or would they simply consider members of said regime *personally* liable for debts thus incurred? Inquiring minds want to know…

Well, the first thing to note at this point is that *there* , the concepts of what one might consider a legitimate government are somewhat different to begin with.

For the Worlds in general, as I mention in today’s out-of-order trope-a-day People’s Republic of Tyranny, unlike Earth, there is no general consensus in favor of representative democracy. (And, heck, the Accord has members for whom the entire concept would be meaningless – hive minds, say, in which The Man would have The Vote – or would need a lot of revision – sophonts with specialized castes, like those of many Earth insects, in which all sophs are definitely not created equal and some subcastes may not even be sophont.)

Now, where the eldrae, the Empire, and the Directorate of Gilea & Company in particular are concerned, the thing to remember is that they’re libertists, and pretty hard-core ones by our standards. So far as they’re concerned, governmental legitimacy can only come from the unanimous consent of the governed, not the “representative consent of the governed”, or the “implicit consent of the governed”, or whatever other excuse one might cobble together. That’s what defines a Society of Consent. All other forms of government are necessarily based on the coercion of the unwilling, and therefore korasmóníë, “force-states”, all of which are mighty obnoxious in the sight of the Freest of the Free.

Representativeness as we would define it, therefore, doesn’t exactly cut much ice with them. In an autocracy, one man is wearing the jackboots. In a democracy, >=(50%+1) men are wearing the jackboots. Neither of these cases is equivalent to an absence of jackboots, but both of them are suspiciously near-equivalent to a gang of nasty little slaving thugs who probably pull the wings off flies and engage in dubious sexual practices.

Now, on the specifics of odious debt, I suspect what matters to them is continuity. Recall, so far as they’re concerned, a government is just another type of business. If your revolution just happens to be a change in management, or a takeover that still lays claim to all the assets of the business – well, corporations don’t get to conveniently forget about their liabilities just because the shareholders fired the board for making deals they wouldn’t have approved of and replaced them. You don’t get to claim the assets, the name, the infrastructure, yadda yadda, without the liabilities that come attached to them. (Although we might be willing to talk about restructuring. Maybe. If it improves our chances of getting our money back.)

If, instead, it’s the equivalent of buying the company’s assets at the liquidation sale – well, fine, then, you don’t get the liabilities (they aren’t holding Joe Average responsible, you see; they’re holding the corporate governance responsible, in short). But you also aren’t necessarily the seniormost creditor in that liquidation – if the overthrown dictator borrowed a few billion exvals to spend on battlecruisers and palaces, and you don’t want to honor the loan under these circumstances, that’s fine, but you can’t have the battlecruisers and palaces either. We have a lien and a legitimate claim on the assets of the former regime. You can’t disavow the legitimacy of a transaction and simultaneously claim ownership of the assets that transaction paid for. That’s double-billing, and pretty odious double-billing at that.

This is, of course, arguably rather a harsh position to take – but should you point that out to them, the average Imperial will shrug and point out that:

(a) As long xenohistorical experience has taught them, The Revolution Was Not (Will Not Be) Civilized, and should this turn out to be the rare exception where the new regime isn’t a bunch of equivalent thugs wearing differently colored hats, someone will probably offer to help them out with their debts later on – and if they are, why exactly do they deserve a freebie?

(b) That in any case, there’s an established precedent for being oppressed, and it worked for them, and they are deeply cynical, therefore, about this supposed “lack of support” on the part of the many.

And finally:

(c) In any case, that loan is not the bank’s money to give away. It’s their customers’ money, their investors’ money, the people to whom they have a fiduciary responsibility, and it is absolutely not their place to decide to give away their customers’ money without their customers’ joint say-so. No matter who might claim otherwise.

(Every note, after all, has two ends – and that some governments are often happy to order the wiping out “odious debt” without so much as mentioning that the other end of that note is coming right out of a bunch of pension funds, small investors’ funds, etc., that don’t particularly deserve to be stiffed is another one of those things that the average Imperial would find headbangingly dishonest. If exactly what they’d expect from a korasmóníë.)

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