Point of View

Our debt to French history

July 24, 2011 

Current attempts to continue the once-routine policy of raising the national debt ceiling are now entangled in the endless arguments about government budgets and tax revenues that dominate political debates in Washington and in every state legislature.

The idea of political compromise has become anathema for many politicians, especially the Republicans in Congress who insist that compromises on the debt and other issues cannot include the slightest tax increase for even the wealthiest citizens and corporations.

Although the collapse of a bipartisan consensus on debt ceiling adjustments is a recent development in the American Congress, there are some striking similarities between the current paralysis in Washington and the financial crisis that preceded the famous revolution in 18th century France. History never exactly repeats itself, of course, and tea party vehemence in July 2011 is not taking us back to the July Revolutions of 1776 or 1789.

The American impasse in 2011 nevertheless resembles certain aspects of the French situation in the 1780s. The 18th century French government faced chronic financial problems because France had fought a series of wars that steadily increased the national debt. This funding problem did not become a full-blown government crisis, however, until the monarchy borrowed heavily to pay for the military forces that joined America's revolutionary war against Great Britain.

The French-American campaign led to America's national independence, but France funded the American war without raising taxes (much like the United States borrowed to wage wars in Afghanistan and Iraq). By the late 1780s, the French government lacked the revenue to continue payments on its debt, maintain its large army and also support the administrative institutions of a modern state.

Like the United States today, 18th century France was one of the world's wealthiest countries, yet the government was becoming insolvent because nobles and large landowners enjoyed tax exemptions and other special privileges.

King Louis XVI's ministers saw that they could manage most of France's financial problems if they could reform the tax system, but the nobles rejected every proposal that would have eliminated their tax exemptions or forced them to pay new taxes on their land. They complained about the centralizing national government, and (like tea party Americans) they claimed to defend long-existing traditions.

Many nobles romanticized a mythologized past in which local elites had controlled the political and economic power that now flowed to the national government or toward non-noble merchants and urban populations. Describing themselves as patriotic advocates for French traditions, they saw their refusal to accept new taxes as an essential defense of true France.

Despite the political and economic changes in French society, the nobility still controlled the law courts, or parlements, that had to approve legal changes that would alter the traditional tax exemptions. The king's financial ministers therefore tried to mobilize public support for such changes by organizing a special Assembly of Notables (an 18th century predecessor to our recent Debt Reduction Commission), but the Notables could not agree on the proposed reforms.

Dire warnings about a government default also failed to persuade the Parisian parlement to approve additional taxes on the privileged classes. The parlement argued that only a convocation of the clergy, nobility and common people could authorize new taxes. Louis XVI finally agreed to convene such an Assembly (the Estates-General), which elite nobles expected to control when it met at the royal palace in Versailles.

The representatives of the "common people" soon declared themselves to be an independent new National Assembly, however, and they gained the support of angry crowds in Paris as their revolutionary government established equal legal rights, abolished the noble tax exemptions, confiscated church lands and eventually paid off most of the public debts with devalued money. Many of the nobles who had opposed tax reforms left France and later lost their land.

Americans are not repeating the French Revolution, but we are sailing in dangerous political waters. Our public culture shows the familiar signs of a political crisis, including the strong desire to promote rigid ideologies over pragmatic policymaking. Today's "no new tax" Republicans, like earlier French nobles, reject compromises because they are certain that their ideas and interests represent essential traditions and interests of the whole society.

The French nobility launched an uncontrollable political storm that ultimately transformed its short-term victories into long-term defeats. This history may now seem remote, but the consequences of ideological rigidities in 18th century France are worth remembering whenever American politicians blithely suggest that a wealthy modern nation can default on its debts, return to a mythical national past and happily sustain a widening economic gap between its privileged elites and the vulnerable people who surround them.

Lloyd Kramer is a professor of history at UNC-Chapel Hill and author of the forthcoming "Nationalism in Europe and America: Politics, Cultures, and Identities Since 1775."

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