What We Can Learn From Iceland

Events in North Africa and the Middle East have recently served as an effective distraction for the American people from the continuing financial battles back here at home. But, if we are to look overseas, perhaps we should look northward, to the tiny island nation of Iceland, where they have recently been fighting their own kind of battle, one that could serve as an example as we search for resolution to our ongoing debates over the budget and the deficit.

Iceland has an interesting financial history (laid out in detail here, in an article from a few weeks ago at Daily Kos). In short, Iceland’s privatized banks began offering high-return online banking, in an attempt to attract foreign investments. But, as these investments grew, so did Iceland’s foreign debt. This debt caused the banks to fail, and for them to be nationalized, while the Kroner (Iceland’s currency) lost most of its value. Eventually, Iceland was forced to declare bankruptcy.

Parliament Building in Reykjavík, Iceland

Image via Wikipedia

The government, in an attempt to salvage their economy, took out loans from other European countries. They then reached an agreement that would require the citizens of Iceland to pay off the debt, with each person being responsible for 15 years of 100 Euro per month payments. The residents of Iceland were rightfully outraged at being expected to pay off the debts of private banks, and they took action.

Not only did they refuse to pay off the loans, they also decided to rewrite their constitution. They decided to draft a constitution that would free them from submitting to international banks. But, even more extraordinary than their decision to rewrite their constitution is they way that they chose to do it.

The people of Iceland elected twenty-five citizens with no political party affiliation to draft the new document, while also allowing all citizens to offer suggestions. The entire process is being streamed online, allowing everyone in the country to act as both a witness and a participant. Ultimately, this new draft of their constitution will be submitted to their parliament for approval.

There are lessons to be learned from this process. Admittedly, America is a much, much larger country than Iceland, with a much, much larger economy. But, the problem is the same. Private banks have repeatedly made huge mistakes, which private citizens are now being expected to pay for. Though the method of payment differs, the principal is the same. And, the solution can be the same, as well. The citizens can rise up and simply refuse to pay. The banks can be held accountable for their mistakes, and laws can be rewritten to make sure that these mistakes cannot be passed on to the citizenry. But, like in Iceland, this will require unity among the populace, meaning we will have to ignore partisan politics and learn to stand together. This is not something Americans have a lot of practice with, but that does not mean that it is not possible. I’m not such an idealist that I think we could win enough support to rewrite our Constitution. That document has been practically elevated to the level of scripture among some groups. But, we can amend it. That is one of its greatest virtues, that it has the ability to evolve as society dictates. Or, new laws can be written, laws that keep the innocent from having to pay for the crimes of banks and corporations. They are able to hold us hostage only because we allow it. So, we just have to let them know that we won’t allow it anymore. Everyone in America should be a part of this process, because we are all affected by what has happened to our economy. But, it would require that we all lay aside our egos and political affiliations, and for once think of the greater good. But, it can be done. And, it should be done.

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