> I wouldn't worry too much about the debts that they owe to the state.
Why not? The state can forgive the debt, but when those resources disappear from the economy then many people will lose out.
Why not? The state can forgive the debt, but when those resources disappear from the economy then many people will lose out.
My initial reaction is "...and?"
Not because I'm trying to be obstinate or lacking empathy, but because I'm trying to hard visualize a situation (re: China) where those who lose out legitimately can do anything about it.
They can't realistically move, or revolt. They can starve[0], but that's happened in the past and the State really didn't suffer for it.
--- [0] https://en.m.wikipedia.org/wiki/Great_Chinese_Famine
Some can. Those are the ones who matter. No man rules alone--political leaders are only powerful insomuch as they can incentives or coërce others to act for them. A ruling class whose living standards is falling is a ruling class more willing to entertain other leaders.
"Certain types of unemployment are likely to be perceived as more politically costly than others - e.g. because returning to family farms acts as a kind of safety valve, even though a significant fall in living standards, unemployment among migrant workers is likely to be less costly, or because university graduates are presumably more communicative and have higher expectations, their unemployment might be more costly" [1].
[1] http://carnegieendowment.org/chinafinancialmarkets/66221
History isn't in agreement, and time after time, the peasants will starve before the bourgeoisie suffer to a point that they feel enough pain to revolt.
It's economically cheaper for the State to continue to pay for the ruling classes' requisite "hookers and blow" than it is to pay for social programs.
I can't recall a single civilization where the majority of people were "those people". The point is there are enough who demand enough that mortgaging the non-influential majority to pay for "those peoples'" bread (or as you put it, "hookers and blow") will be a short-term patch at best. (Reverse wealth transfers are not uncommon in a regime's dying days. Case in point: Venezuela.)
The bill eventually comes due, but what cost does the population pay in the interim?
I hope that all subjugated and disenfranchised people rise up to remind their governments that they are the reason that those governments ultimately exist, but the cost of that "disobedience" is a heavy burden if they don't succeed.
Another example is the scientific and military grant-making processes. Such grants may fund labs and companies with wealthy owners and managers. But that isn't the intent behind the grants. Furthermore, politicians--as a group--don't existentially fear the defense contractors or contract-lab operators.
Now consider Venezuela. Babies are starving [3]. Yet bondholders get paid. Why is the government more afraid of its bondholders than citizens? If it's because the government fears the bondholders' reactions, e.g. military insurrection, more than popular revolt then it's a desperate maneuver.
[1] https://en.wikipedia.org/wiki/2008_Bank_Bailout
[2] https://en.wikipedia.org/wiki/Emergency_Economic_Stabilizati...
[3] https://www.nytimes.com/2016/05/16/world/americas/dying-infa...