It is probably a good idea to get some perspective on debt here. They're one of the many nations whose debt issue is far more problematic than ours, at 225% of GDP -- second in the world, only to Zimbabwe.
https://www.cia.gov/library/publicat.../2186rank.html
Britain's somewhere in the 20s on the list. The U.S. is #36.
This is not to say that we should or should not wade in and help Japan. We should. We all know this. We all know that it sucks to have a debt problem, and we all know that we're all very concerned about deleveraging. Bully.
But this is not in a vacuum. The Brits and especially the Japanese certainly hold some of our debt. But they too are running huge deficits. Someone holds their debt, including us.
I don't know what you guys mean in this thread. I am for dispatching the various warships and search and rescue teams that were an immediate response, and I don't think I'd argue against loans to Japan to rebuild.
I'm all in favor of stuff like food aid, and I wonder about the pros and cons of doing the to-the-nickel accounting on that stuff.
These things are worth what someone will pay for it. In the worst-hit areas of Japan, market-pricing this stuff would mean going into an earthquake/tsunami/meltdown ravaged region, feeding people who haven't eaten in 3 or 4 days, and saying their bowl of noodles will cost their government 20 dollars (for example.)
On the other hand, you can argue that giving it away is unfair from the U.S. perspective, because as we all say we too have a (comparatively minor) debt problem.
I have two responses based on these facts:
1) The situation, vis a vis Japan (like many Westernized nations), has not changed. We are in debt. They are more in debt. The recession has made debt pictures worse across the industrialized world. What would we have done in the past in such a situation? I
think the answer is a mix of loans and aid (for example, maybe we charge people for the uninvited but appreciated presence of our military in natural disasters... I never remember having read about it. I think it would be very bad
PR.) So by that logic, I think it makes sense to treat this aid as we've always treated aid to relatively rich countries (as opposed to Haiti, for example.)
2) It seems obvious that market-pricing does not apply, but I could see
status quo ante pricing, that is, charging "normal" prices for these goods, against U.S. debt held by Japan. In other words, Japan sells us bonds for the total price of this aid, offsetting the debt figure we incur by sending them food in an hour of need (or whatever instrument we use as counters of debt.)
But this depends, if you ask me, on what's customary in such cases.
We do these things because it is right, but also because historically it's been a relatively cheap way to build goodwill. Our friends around the world understand and appreciate that the U.S. has its issues but that we are there for them when the sh1t hits the fan.
What does that cost us? What is it worth?
I believe that loans are a big part of what we call "aid", and if that is the case, there isn't really an issue.
There is only an issue if the question is why we're not charging 20 bucks for a cup of noodles. In other words, market pricing in a disaster zone defeats the purpose. It would be viewed as profiteering.
Pricing in any other way can be characterized as a "subsidized" loan.
You don't get to "help" without foregoing some of the usual capitalist mechanisms. I can't say that in Japan's case that all aid should be a straight giveaway.
I wonder if straight grants usually happen in such a circumstance. I doubt it. I think we're probably talking about aid with a price tag through loans.
PFnV
Re: Should we donate money to Japan ?
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