So writing them off when they could be repaid seems, in a sense, unfair to the creditors, while causing resentment by those who have indeed paid. The key problem to be explained is why debt financing ever was used in the first place. So creditors initially headed by the palace and temples in Sumer as the major and paradigmatic creditors developed debt contracts, with a fixed payment. This arrangement ultimately was backed by an ability to seize land and labour in the case of failure to pay.
Nowadays, however, the availability of big data, and much more accurate information makes the problem of information asymmetry much less of a concern. The fiscal distortion encouraging debt over equity should be urgently removed — but that is another story, which we will not pursue here.
Psalm 89 and the Ancient Near East by Knife, Wayne - PDF Drive
We no longer live in an agrarian society. Young adults are polarised into a large group who cannot afford to buy housing on the basis of sensible loan-to-value mortgage ratios , and the wealthier, who can.
With mortgage providers offering mortgages with an LTV loan to value ratio of not more than 80 to 85 percent, the hurdle of needing to accumulate a saved lump sum before becoming a property owner would be drastically reduced. The State could insist on maintaining its equity if it believed that the sales price transfer valuation had been artificially lowered. Equally the original help-to-buy owner could ask the State to rollover its participation into a new purchase, subject to the same cap as before , with the understanding that such a request normally would be honored.
So the benefit to prospective buyers aided by such a scheme is limited, and other prospective buyers would be made worse off. This latter would reduce housing prices, perhaps sharply. Our expectation, however, is that such a scheme would reduce property prices and keep them more reasonable, especially in urban centres. SMEs are risky.
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A large proportion fail after a few years. Beyond that, however, SME entrepreneurs need outside funding to enable them to accumulate additional capital, finance inventories, and ride out the inevitable but unforeseen setbacks to cash flow. Equity finance is almost always preferable to debt finance, though some risk-loving entrepreneurs would not wish to dilute their ownership.
Our proposal is to establish a public sector equity fund to take participatory shares in SMEs seeking additional equity funding. This would be an equity fund, not a public-sector bank as currently envisaged by the UK Labour Party. For creditors, one of the problems of debt finance is that the up-side is limited to the contractual payment of interest and principal.
The key aim of such creditors is to limit risk. That is a basic reason for trying to bail-in such creditors in future bank resolutions. It is far from clear why a public sector bank would be better than a private bank in such risk assessment. However, if the purpose of the exercise is to allow the State to encourage highly risky but potentially valuable start-ups, particularly in high-tech and innovatory fields, then financing by the State should take an equity, not a debt, format.
But again, one should ask why a public-sector equity fund would do better than private sector equity? There are several possible reasons why. In many countries there is presently too little private sector equity funding. It might be cheaper to run and could become more diversified. But it would be absolutely essential to keep the management of any such fund at arms-length from any form of political control or pressure.
Moreover, if the bottom-line of profit maximisation is relaxed, there is a tendency towards inefficiency. The mandate of any public-sector equity fund would need careful drafting, and the choice of management would be crucial. If such management was to become a rest-home for political hacks, the outcome would be disastrous.
Perhaps the key question is whether the private sector provides such insufficient equity funding for SMEs that it is worth going down the admittedly dangerous route of establishing a public sector equity fund for SMEs? The provision of higher university education is expensive. Such education provides the more gifted and better educated group in each cohort with further skills and human capital.
This enables them to raise their incomes, relative to the lesser skilled. There are numerous studies showing the diverging paths of the income of the highly skilled relative to the unskilled and less academically gifted. Until a few decades ago university tuition was free in most instances. While the State wants its members to be highly skilled, it now requires those who are not rich enough — or whose parents are not — to pay up front with borrowed credit.
They then must assume on graduation a severe debt burden, which will hang around their necks for a long, long time.
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But there was little choice. So it is not surprising that the UK Labour Party proposal in the election to remove future student debt loads, and even perhaps to cancel prior student debts, was so popular, above all with the young. Any proposal for a Jubilee debt cancellation therefore must review student loans. There are several ways to cope with the deepening problem of student debt. Our opinion is that requiring the highly skilled and high earning to repay the State for its public participation in imparting such skills, was correct in principle.
The problem was the financing mode. It should have been an equity participation, not debt finance. To reflect its equity character, every student should have to pay a given, calculated share of future incomes, which could not be avoided by paying for tuition up front. So those who would be rich from inherited assets in any case would face a difficult problem: whether to go to university and pay a skill-tithe on the income from inherited assets, or not.
This policy might reduce income inequality and assortative marriage. One of the problems with student debt currently is that it can be fairly easily evaded by disappearing abroad. This would be just another form of tax evasion. What should be done everywhere is to finance university tuition by equity participation. Suppose that all countries require the taxpayer to state their university education on their income tax form. Anyone failing to report, and pay, their university participation equity tithe would be subject to tax evasion penalties, in exactly the same way as tax evasion is handled in other cases.
Another advantage of a student equity participation format is that the upside is not capped. If one of the students founds a new Facebook, the State gets to share, e. Universities should also, partially, have the objective of creating wealth. It would improve teaching incentives if some smallish proportion of the equity participation funding of students was returned directly to the universities where they studied. Our bottom line is that student loan financing be shifted from debt finance to equity finance. The plan described above is simply an illustration of how this principle might be applied in practice.
In view of the near impossibility of replicating the debt cancellations of prior millennia in the modern context, we have re-interpreted the prior objective of seeking to sustain a property-owning democracy in terms of equity participation by the State to enable any young person to afford the down-payment for a home, to finance a start-up business, and to benefit if academically gifted from tertiary education. One side benefit of this approach via equity participation is that, in theory and after a long time lapse, such equity participation should provide the State with net funds.
So long as the population grows, and becomes richer, real house prices should on balance rise. A public sector equity fund should, if run properly, make a small profit. Equity participation in the subsequent incomes of those going to university should be calibrated at least to break even. This would not be the case in the early years of such schemes, with a negative cash flow. This would be inalienable in all circumstances, so that no one else, e. The initial lump sum would be invested in a default portfolio of half blue chip shares a public sector ETF and half indexed gilts, unless a case was made to an independent ombudsman for a differing portfolio.
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No connected lending, e. The sum would be withdrawn if the beneficiary was found guilty of a criminal act prior to vesting and over the age of 11 ; this would be a worthwhile disincentive to bad behaviour. It also would be withdrawn if the recipient ceased to be normally resident in their country of birth, with loopholes for military and diplomats posted abroad. There would need to be consideration for families who went temporarily abroad for business reasons, but clearly intended to remain permanently domiciled in their country of birth. If these schemes were managed well, the lump-sum initial allocation could rise over time.
No doubt there are other possible imaginative proposals for sustaining a property-owning democracy. But even if the other three prior equity participation schemes became ultimately self-financing, such lump-sum capital allocation would always need financing. In one respect a modern Jubilee could be like that of past millennia. Once societies became agrarian, land ownership became the main source of power and wealth. That continued largely unchanged until the Industrial Revolution. Unlike other forms of wealth, land is fixed, not mobile.
The disincentives arising from taxation in reduction of effort, transfer abroad, etc. With a few exceptions e. There is also an ethical case for land taxation that does not apply to most other forms of wealth at least, not to the same extent. Most of these result from public spending, e. In particular the State provides peace and security via law, defence and police. Without these services, as Hobbes Leviathan, noted, not only would life be brutish and short, but land values would be low and uncertain.
Again, the State provides a wide range of services, e. Finally, land value depends on the degree to which others want to live and work in the area. However, capital investment in construction and related development entails a real expense, and as such is less appropriate than land as a subject for taxation.
Taxing the bare land value rather than an overall property tax i. The same argument cannot be used for rural land. The shape and appearance of the countryside is a man-made artefact. It would be idiotic to place a tax on national public parks. What could be done would be to assess the broad social value of different forms of rural land usage so as to qualify the land tax. This may sound difficult and bureaucratic, but it would only be an extension of the subsidy procedures for agriculture already in place in many countries, e. In so far as farm land prices did fall, this could enable a younger and more diverse set of farmers to come into the profession.
Estimating bare land values would be difficult, but no more so than for many other objects of value, e. So our preference would be for a land tax based on pure land values, with a property tax as a fall-back. A great public benefit of such a tax is that it would immediately lower market prices for land, and hence for housing and commercial properties. Since the threat of such a levy would distort and disrupt valuations and transactions, it might seem logical to impose an initially affordable but steadily rising tax on bare land or property values, rather than an immediate stochastic jump.
A regular low tax rate applied to such land valuations would require such valuations to be kept up-to-date, and would therefore be bureaucratically onerous, but far less so than trying to introduce a broader wealth tax. And because land is immobile, it would have less distortionary effects on the economy, while redistributing wealth from the rich and powerful to a property-owning democracy.
The debt cancellation Jubilees of prior millennia were introduced most typically, as set out in Section 2, immediately upon the succession of a new sovereign. This could be done because most such debts were owed to the royal King himself. It would neither be possible, nor constitutionally acceptable and democratic, to levy a land or property tax without prior notice.
The legislature would have to agree to it, and the process of valuation undertaken. This means that unless there is a general financial crisis, the path of least resistance to the land tax advocated by most classical economists would have to be gradual, but steadily rising. Debt-cancelling Jubilees in prior millennia were a form of social engineering Sections 2 and 3. They worked well to maintain peace, prosperity and stability, holding inequality in check Section 4.
Their disappearance played a role in ushering in darker ages Section 5. We cannot now replicate such Jubilees in a single stroke, because most financial contracts are intermediated via financial institutions, and the Sovereign has mutated from chief creditor to main debtor, Section 6. But we can try to replicate the former objectives of such social engineering.
We argue that we can do so best by having the State provide an equity participation in housing, SME financing and tertiary education, Sections 7 and 8. Ultimately we propose that all young citizens be endowed with a capital stake in the country at birth, Section 8. Funding for all this should, we believe, be provided a regular tax on bare land valuation or perhaps property tax as the best way to transfer funds from the wealthy and powerful to construct a property owning democratic society Section 9.
Those who reject social engineering out of hand will dismiss this. Those who would bear the extra tax would be strongly opposed — since they are, virtually by definition, rich and powerful. They will seek to make such proposals unlikely to get through. This means that a broad public discussion of the issues we have raised needs to be undertaken and popularized. Fortunately, there is a counter-wave of support for a more fair and efficient fiscal policy. A combination of globalisation, demographic forces and technology has led to widening income inequality while restraining real wages for the average worker.
To offset the deflationary forces these trends have engendered, Central Banks embarked on unprecedented monetary expansion. That had a modest effect of limiting income inequality, but a very great effect on exacerbating wealth inequality, by inflating asset prices vastly more than incomes, perhaps particularly eroding the position of the middle class.
Society has become so polarised between haves and have-nots that this is endangering the stability of our democratic system. This can and should, we believe, be countered by a modicum of social engineering with the aim of recovering the social objectives that underpinned the Jubilees of earlier millennia. Adequate provision must also be made for those who are in want of the necessities of life. Acemoglu, G. De Luca and G. He remitted to private debtors in Rome and in Italy immense sums of money owed to the privy-purse, and in the provinces he remitted large amounts of arrears; and he ordered the promissory notes to be burned in the Forum of the Deified Trajan, in order that the general sense of security might thereby be increased.
He gave orders that the property of condemned persons should not accrue to the privy-purse, and in each case deposited the whole amount in the public treasury. Under him the petty warring states of the lower valley were forced into unity and peace, and disciplined into order and security by an historic code of laws. Initially, Hammurabi gave Rim Sin I no cause for alarm. He instituted his famous code of laws c. At the same time he was setting his troops in order and planning his campaign for the southern region of Mesopotamia. Hammurabi was an able administrator, an adroit diplomat, and canny imperialist, patient in the achievement of his goals.
Then, with his power at home secure and his military forces primed, he began a five-year series of campaigns against rival states to the south and east, expanding his territory. When the Elamites invaded the central plains of Mesopotamia from the east, Hammurabi allied himself with Larsa to defeat them. That accomplished, he broke the alliance and swiftly took the cities of Uruk and Isin, previously held by Larsa, by forming alliances with other city-states such as Nippur and Lagash.
The alliances he made with other states would repeatedly be broken when the king found it necessary to do so but, as rulers continued to enter into pacts with Hammurabi, it does not seem to have occurred to any of them that he would do the same to them as he had previously to others. A technique he seems to have used first in this engagement would become his preferred method in others when circumstances allowed: the damming up of water sources to the city to withhold them from the enemy until surrender or, possibly, withholding the waters through a dam and then releasing them to flood the city before then mounting an attack.
Larsa was the last stronghold of Rim Sin and, with its fall, there was no other force to stand against the king of Babylon in the south. With the southern part of Mesopotamia under control, Hammurabi turned north and west. Holding the city directly, instead of having to negotiate for resources, would be preferable to any ruler and certainly was so to Hammurabi. He struck swiftly at Mari in BCE and, for some reason, destroyed it instead of simply conquering it. This is a much greater mystery than why he would march against it in the first place. Other conquered cities were absorbed into the kingdom and then repaired and improved upon.
Zimri-Lim is thought to have been killed in this engagement as he vanishes from the historical record in that same year. From Mari, Hammurabi marched on Ashur and took the region of Assyria and finally Eshnunna also conquered by damming up of the waters so that, by BCE, he ruled all of Mesopotamia. Although Hammurabi spent a considerable amount of time on campaign, he made sure to provide for the people whose lands he ruled over. A popular title applied to Hammurabi in his lifetime was bani matim , 'builder of the land', because of the many building projects and canals he ordered constructed throughout the region.
These letters and administrative works such as directives for the building of canals, food distribution, beautification and building projects, and legal issues support the view which Hammurabi held of himself. The prologue to his famous law code begins:.
When the lofty Anu , King of the Annunaki and Bel, Lord of Heaven and Earth, he who determines the destiny of the land, committed the rule of all mankind to Marduk, when they pronounced the lofty name of Babylon, when they made it famous among the quarters of the world and in its midst established an everlasting kingdom whose foundations were firm as heaven and earth — at that time Anu and Bel called me, Hammurabi, the exalted prince, the worshipper of the gods, to cause justice to prevail in the land, to destroy the wicked and the evil, to prevent the strong from oppressing the weak, to enlighten the land and to further the welfare of the people.
Hammurabi, the governor named by Bel, am I, who brought about plenty and abundance. Durant, His law code is not the first such code in history though it is often called so but is certainly the most famous from antiquity prior to the code set down in the biblical books. The Code of Ur-Nammu c. The historian Kriwaczek explains this, writing :. In earlier Sumerian-Akkadian times, all communities had felt themselves to be joint members of the same family, all equally servants under the eyes of the gods. In such circumstances disputes could be settled by recourse to a collectively accepted value system, where blood was thicker than water, and fair restitution more desirable than revenge.
Psalm 89 and the Ancient Near East
Now, however, when urban citizens commonly rubbed shoulders with nomads following a completely different way of life, when speakers of several west Semitic Amurru languages, as well as others, were thrown together with uncomprehending Akkadians, confrontation must all too easily have spilled over into conflict. Vendettas and blood feuds must often have threatened the cohesion of the empire. Historian Karen Rhea Nemet-Najat writes:. The king was directly responsible for administering justice on behalf of the gods, who had established law and order in the universe.
Law, Ancient Near-Eastern
And the house which he built fall in and kill its owner, then that builder shall be put to death. But if there is serious injury, you are to take life for life, eye for eye, tooth for tooth, hand for hand, foot for foot, burn for burn, wound for wound, bruise for bruise. Exodus The woman who did so and survived the ordeal would be recognized as innocent, but then her accuser would be found guilty of false witness and punished by death.
The ordeal was resorted to regularly in what were considered the most serious crimes, adultery and sorcery, because it was thought these two infractions were most likely to undermine social stability. Sorcery, to an ancient Mesopotamian, would not have exactly the same definition as it does in the modern day but would be along the lines of performing acts that went against the known will of the gods -- acts which reflected on oneself the kind of power and prestige only the gods could lay claim to. Tales of evil sorcerers and sorceresses are found throughout many periods of Mesopotamian history and the writers of these tales always have them meet with a bad end as, it seems, they also did when submitted to the Ordeal.
In the last years of his life his son, Samsu-Iluna, had already taken over the responsibilities of the throne and assumed full reign in BCE. The conquest of Eshnunna had removed a barrier to the east that had buffered the region against incursions by people such as the Hittites and Kassites. Once that barrier was gone, and news of the great king weakening spread, the eastern tribes prepared their armies to invade. The vast kingdom Hammurabi had built during his lifetime began to fall apart within a year of his death, and those cities that had been part of vassal states secured their borders and announced their autonomy.
The Hittites sacked Babylon and the Kassites inhabited and re-named it. Hammurabi is best remembered today as a lawgiver whose code served as a standard for later laws but, in his time, he was known as the ruler who united Mesopotamia under a single governing body in the same way Sargon the Great of Akkad had done centuries before.
Unlike Sargon the Great, however, whose multi-ethnic empire was continually torn by internecine strife, Hammurabi ruled over a kingdom whose people enjoyed relative peace following his conquest. The scholar Gwendolyn Leick writes:. Hammurabi remains one of the great kings of Mesopotamia, an outstanding diplomat and negotiator who was patient enough to wait for the right time and then ruthless enough to achieve his aims without stretching his resources too far. It is a testimony to his rule that, unlike Sargon or his grandson Naram-Sin from earlier times, Hammurabi did not have to re-conquer cities and regions repeatedly but, having brought them under Babylonian rule, was, for the most part, interested in improving them and the standard of living of the inhabitants a notable exception being Mari, of course.
His legacy as a lawgiver reflects his genuine concern for social justice and the betterment of the lives of his people. Editorial Review This Article has been reviewed for accuracy, reliability and adherence to academic standards prior to publication. We're a small non-profit organisation run by a handful of volunteers. Become a Member. Mark, J. Ancient History Encyclopedia.
Mark, Joshua J. Last modified April 16,