Why Argentina Defaults? A Consideration from the Back-to-the-Body Perspective

I have been saying that the Back-to-the-Body perspective helps in solving social problems. Well, one such problem is Argentina’s difficulty in meeting her sovereign-debt obligations (“Argentine Talks Lift Small ‘Holdouts'” (The Wall Street Journal, 7 July 2014, p. C1). In this post I make certain considerations about the body and then apply the Back-to-the-Body perspective to the level of nation, considering the matter of sovereign debt.

What Does the Body Say?

In the body, creation of nutrition comes from the work of the “stomach” (see here for the meaning of the metonymies “stomach,” “brain,” and “heart”). The nutrients created by the stomach are then distributed to the rest of the body through the work of the heart, with assistance from the brain. The brain protects the body against all enemies foreign and domestic, so to speak. The source of materials to produce nutrients for the body come from gifts (for example, from parents), from self-work, or from borrowed funds.

At the level of country, this corresponds to the productive forces of the nation, the people, el pueblo, das Volk (the “proletariat” in Marxist terminology). When money is injected into the system, money comes as a representation of the “means of life” in its three aspects: the physical means of existence, the emotional means to satisfy the needs of the heart, and the intellectual means to satisfy the needs of the brain.

Money’s value is its ability to be converted into all those goods that sustain and enhance life (for the stomach), liberty (for the brain), and the pursuit of happiness (for the heart). These are the three inalienable rights mentioned in the Constitution of the United States of America.

Thus, at the level of country it is the same: the money that the country owns can be converted into all the goods that the country’s citizens need in order to live, experience freedom, and pursue happiness. This applies to money that the country owns, but it is different with regard to money that the country has borrowed.

What is Different about Borrowed Money

Here I make a contrast between money owned and money borrowed. With regard to money owned, the country can, as stated, use that money to enhance the citizens’ life, liberty, and pursuit of happiness. It is different with regard to money borrowed.

When dealing with money borrowed, the borrowing country is not at liberty to use this money as it sees fit in order to enhance the citizens’ life, liberty, and pursuit of happiness. The country must use the borrowed money so as to produce more money. By producing more money than the money borrowed, the borrowing country will be in a position to repay the debt when it comes due. It can also keep some money as profit. This profit can then be used to enhance the citizens’ life, liberty, and pursuit of happiness.

For example, suppose a country borrows one billion dollars to build a power plant. Suppose further that, in doing so, the borrowing country produces 1.2 billion dollars. It can now repay the debt. It can also keep 0.2 billion dollars as profit. The 0.2 billion dollars can then be used to enhance the citizens’ life, liberty, and pursuit of happiness.

Clear thinking in these matters may lead to wise choices and prosperous results. For the Argentine leadership, then, the question is this: In what way has the borrowed money been used? Did the Argentine government use the money to produce an even greater amount of money, thus becoming empowered to pay back the debt? Such questions will bring clarity to the discussion and may help avoid defaults.

I end with a quote:

Love gave birth to the world; friendship will give birth to it again. (Friedrich Hölderlin. Hyperion. iBooks)

Paulo-Juarez Pereira
Ypsilanti, Michigan, USA
July 7, 2014 — the day before I depart for Brazil