Debt as a Drug

Planet Money interviews Nassim Taleb, who recently participated in a Freakonomics quorum on financial reform, for its Deep Read series. Taleb compares the developed world’s dependence on debt to drug addiction: “What’s worse, the period in which he has to suffer withdrawal pains, or giving him more cocaine, or heroin or whatever he’s addicted to?” he says. His suggestion? Lose the debt, no matter how painful the adjustment is: “The governments should know that what matters for us is cure the problem, not postpone it. We’ve postponed the problem for two years.” [%comments]

Ian Kemmish

It depends on the patient(s) and their circumstances. If you imagine two doctors on a desert island, it might make sense for one to take methadone while overseeing the other's cold turkey, and then for the second doctor to oversee the first.

Might the same not apply in a world of interconnected central banks? At least in places, and at least in part, is it not already happening?


Two years? We've been accumulating debt at an increased rate since the early 80s.

If it is a drug, we've been on it for nearly my entire life. I don't know how that person stops. More taxes? Social Security cuts? Defense cuts? There isn't a popular answer in there.

Justin James

Bob (#2) -

Agreed. While everyone has a list of government programs they would love to see cut, no one can agree to the same list. Nearly every government program, when looked at individually, has excellent merits. They all serve to provide a valuable service to the many that they could not provide for themselves as individuals. For the elderly it means health care (Social Security is a wash, because you could just put that money into a retirement account with the same effects). For everyone it means national defense, law enforcement, roads, and fire departments. For the poor it is health care, housing, and food. For everyone but the rich it is basic education. For society as a whole it is cultural institutions,national parks, scientific research, etc. The list goes on.

Sure, there is a ton of government waste... no more than I've seen in any Fortune 500 that I've worked for. And yes, some government programs are pork bridges to nowhere. But the services, as a whole, are getting more and more expensive to provide due to increased baseline (roads have to be paved when 50 years ago dirt roads were much more common, schools need computers and other high tech equipment and lights for the football field when 30 years ago no school had these, and so on). As we demand that the quality of government services keep pace with the possible quality that industry offers, cost goes up.

Without a major overhaul of what the typical American expects from the government, the debt problem will continue. And the libertarians and conservatives don't offer a real solution, because if you shift it all to businesses and private companies, guess what? It will still cost about the same, it's just that it gets paid for directly by the users instead of being paid indirectly via taxes. Most people who use those services now won't be able to pay for them on an as-used basis. It's common sense.




Just thought interesting to note that in central Mexico the popular name for debt is precisely "drug". It is common to hear the word "drogado" (on drugs) transformed into the local slang "en-drogado" (on debt).


I thought the article talked about Credit Card debt. That?s exactly how I feel with my credit card.

L. F. File

Problem is most of the world's finances are run by old men. They are all familiar with Keynes' dictum "In the long run we are all dead." They are near the end of their "run". Why would they want to end it in austerity?


Trish R

His suggestion? Lose the debt, no matter how painful the adjustment is.

Of course, someone who is wealthy easily makes this prescription, since it won't affect him. It is the poor and the lower middle class who will bear the brunt of the trimming as they see their ability to obtain health care, quality education, decent housing, and a secure retirement erode and eventually disappear..


Schools need lights for their football fields? They need football fields?

Mark S

To get us out of our debt problem with require BOTH raising taxes AND cutting spending. The pile of debt is too large just to do one or the other. Is there a statesman in either party that will speak this simple truth and act on it?