By Jonathan McQuarrie
Via Globalnews.ca
Personal and household debt has become a defining issue of the post-2008 world. In a series on debt, The Globe and Mail proposes to “[Explore] our dependence on debt—from the average household to global institutions—and the looming risks for a nation addicted to cheap money.” The “addiction” stems in part from the lengthy period of low interest rates set by the Bank of Canada, which currently sits at 0.75%. According to the Bank of Canada, these low rates, below the thirty-year average of approximately 5.5%, have contributed to increased mortgage debts. Debt from consumer spending has also been trending upwards, with consumer credit constituting nearly 45% of disposable income for Canadian households in 2011. Warnings about Canada’s high debt to income ratios have sounded since the 2008 recession, and continue to concern both policymakers and people trying to stretch budgets. Anxiety over high debt extends well beyond the household, shaping government fiscal policy orientated around balanced budgets—to the point of proposals for balanced budget legislation. According to the Canadian Centre of Policy Alternatives, focus on balanced budgets have had the effect of further burdening households, which have to make up for the reduced government spending.
History has much to tell us about debt. The most obvious and frequent use of history is through historical statistics. Many of the reports noted above tended to draw on data sets on interest rates and household debts of thirty years or so. However, reliance on such data is imperfect. As a 2012 C.D. Howe Institute report on household debt noted, the U.S. mortgage crisis emerged in part because of overconfidence in the lack of a fall in nationwide average housing prices since World War II. Data works best when placed in social and cultural context, which is where historians come in.
Here are two ways in which history nuances and sharpens our understanding of debt. There are, of course, many others—these just happen to be two of my favourite lessons.
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Among the approximately 2000 members of the Canadian Expeditionary Force killed at the Second Battle of Ypres in late April and early May 1915 was the only Canadian YMCA worker killed in combat during the First World War. YMCA Honourary Captain Oscar Irwin, attached to the 10th Battalion of the CEF, was killed when he joined the battalion as it set out to retake St. Julien from the Germans in the early morning of April 23rd.