As post-industrial society continues its relentless stomping through time, why aren’t more people asking, “Why do counties have credit ratings?”
Doesn’t that feel odd or out of place in a “meaning of it all” sort of way? Shouldn’t it strike us a bit dodgy that the same “agencies” that rate junk bonds and penny stocks also rate governments?
At face value the practice is sensible insofar as governments take out loans just like any other business… but that’s where we should all pause for a moment in order to look into this issue on a deeper level: is this is the way an global civilization should operate in the first place: credit ratings and trade entities?
The loan aspect in and of itself isn’t all that appalling, but what is unsettling is that countries have basically grown into three camps: nations run and measured by their wealth and armories, nations run by their religions, and nations so destitute (due largely to geography resulting in having nothing with which to do business) that there’s no measure other than borders on a map and the occasional civil war for reasons of ego and animal instincts.
When the “large countries” like the U.S., and now the U.K., have their credit rating downgraded, it’s a blow to the gut, interest rates and confidence. That’s sad. A country can kill thousands of people and cheer like crazy, but if its credit rating gets downgraded people run to their bunkers and reach for their power-granting-guns in primal fear. It’s like the fear of economic collapse is programmed into our DNA just as much as running away from charging bears. Money (and a nation’s ability to produce it) is basically part of the backbone of what defines a nation and controls how its people behave on a daily basis.
Which is the cause and which is the effect? The lower the credit rating of a nation, the more desperate its situation, the more prone to extremism, and therefore the more prone to internal strife and war… or does it work the other way around? Logic would say that the credit rating is a reflection of stability, but has the credit rating of powerful, “stable” nations become so important that the rating itself impacts the country’s stability? Self-fulling economic prophecy? And why in the world do “agencies” like Moody’s have such a great power to define an entire nation’s credit rating. Who has more power in this the purely economics-driven world that we’ve built for ourselves? I’m not sure anymore.
Yes: on a macroeconomic level it makes sense to give a country a credit rating. If a Congress who fights and whines like small children cannot get its act together, then maybe lowering the credit rating will force them to behave (one can hope and pray, but don’t hold you’re breath – these are politicians). But again that begs the question: who has more power: the government or the ratings agencies?
Since all government really is is a giant business, and all the world is is a bunch of giant businesses trading commodities with one another… a credit rating makes good business sense. Giving credit ratings to nations makes good business sense, and business sense is the priority of human kind.
The point is: on a fundamental level is that what countries should be? Businesses? Trading entities? Or has this generation of humanity completely missed the boat on what the world, and human civilization were supposed to be? Were we put on the earth (however it is you personally believe we got here) to draw borders on dirt and rocks? Be buyers and sellers? Put here to create starvation within one border, and obscene luxury right next door – all battling it out for larger plots of rock and luxury? Is that really why 6000 or 40 million years ago humans came to be? It doesn’t feel right.
It’s too late now, though. We’ve made our beds. We’ve made the machine and put it into motion. But if we could pinpoint the time when civilization took its turn in this direction, I truly wish someone was there to dissuade the course. Imagine if we choose a different set of criteria by which to measure importance and value. Criteria that didn’t mandate trade. Once that didn’t require one or the other, but could be both. Giving not trading. Sadly, what we chose is likely the most petty and meaningless path we could have taken – credit ratings for countries. Not morals, not kindness or knowledge or wisdom… trade and credit ratings.
Deep down in our souls I believe people know that we chose the wrong path. Countries as businesses, and wealth as the primary force of power and measure of meaning… deep down, that doesn’t sit right in our conscience. It feels wrong – like we made a big mistake somewhere early on in trying to solve the life equation.
Too bad we’re too weak-minded to do anything about it.