The Slog solves the problem of global debt reconciliation

During my time as a student, I had a long affair with a wonderful Liverpool-Chinese girl. The politics department at Liverpool University had something of a reputation in those days: Tory Minister Arnold Ridley’s brother Fred was the Prof, and Robert Kilroy-Silk was my Social Democracy tutor. But this lady – who we’ll call Lan – was the main focus of my attention for much of the time.

Her Dad owned two very fashionable Chinese restaurants in the city. But of a Saturday, quite a lot of young Skinhead Scousers would pile in after the pubs closed. And as you’d imagine, their favourite shtick was trying to run off without paying. After a Saturday night out, Lan and I would sometimes pitch up at one or other of the eateries. I spent many hours amused by watching the head chef chasing after non-paying yobs with a meat cleaver.

The memory of all this comes back to me now, in the light of global econo-fiscal debt meltdown. Because after the dust has finally settled on the unpleasantness – when all the reconciliations have been calculated – the basic result is going to be that America owes China a shedload of money. Most of us are hoping there won’t be a contemporary nuclear equivalent of meat-cleavers following this outcome – and indeed, to my mind there needn’t be anything quite so uncivilised. There are, after all, many ways to repay a debt.

Persevering with the restaurant analogy, the traditional way of coughing up for a meal you’ve eaten (but can’t afford) has always been a spell in the kitchen washing dishes. This seems to me an excellent guide to what the US should do once the global bill has been totted up, and its credit card has been rejected by the waiter’s EFTPOS gadget.

This isn’t as daft as you’d think. The Chinese Government owns $1.2 trillion of US debt. The adult (working) population of the US is close to 207 million.  The average annual salary in China is roughly £32oo. Cancelling lots of noughts out all over the place and rounding other things up, the total US debt repayment at Chinese salary levels works out at six years per American worker.

So this is the plan.

The American population moves to China for six years, and engages in the process of building the housing required for the burgeoning Chinese upper working and middle class to become property owners. The fact that, in real terms, they are doing this work for nothing bursts the property inflation bubble, and at a stroke solves the Beijing regime’s housing problem.

The Chinese population moves to the US and enjoys a six-year holiday paid for the the State. In doing this, they acquaint themselves with American media, eating and credit-driven corrupt consumption culture.

The Americans thus have a horrible time, and return home grateful for even the tiniest thing. The Chinese have an even worse time, and arrive home further convinced of the benefits of anti-consumption, undemocratic Communism. All debts are paid off, everyone winds up wiser, and the pursuit of mindless material wealth grinds to a halt. In both countries, there is zero inflation – and currency has been replaced by an advanced form of barter derivatives.

The only people unable to learn this lesson are bankers. A joint agreement is signed between Beijing and Washington, under which all bankers are sentenced to life imprisonment in the paddy fields of North Korea.

Everyone is happy. Former bank premises are turned into museums, restaurants, zoos, bowling greens, art house cinemas, flats, and follies. The debtometer goes back to nought, and the whole thing starts all over again.