A military ruler must find money to pay his troops. When his looting and misrule have impoverished his country, not only has the money gone, but also his power. His unlucky citizens have this pathetic consolation: their new poverty brings relief from one cause of political instability. Once the honey pot has been emptied, the wasps fly away.

Sovereign Debt deprives the poor of even this consolation. A new warlord can seize power, and pay his troops with borrowed money. When he flees abroad with the last of the state treasury, his victims are left with his debts. Sovereign Debt is the doctrine that your children must be sold in to slavery to pay the bar bill of the drunken louts who stole your cattle and burnt down your hut.

Sovereign Debt is not a limitless evil. When the debt becomes so large that the interest can no longer be paid, the lending stops, and the rulers become as poor as their subjects.

Cancelling current debt allows new debt to be incurred. It refills the honey pot and will attract a new swarm of wasps. I am not suggesting that the debts should be repaid. They should be repudiated, not cancelled.

Won't this ruin the poor countries credit ratings, preventing them from issuing debt in the future? Yes, that is the point.

Won't this prevent investment? Kind of. Dams which generate electricity and provide irrigation water can be paid for with commercial debt. Countries only need to issue sovereign debt to raise money to build the dams which silt up and spread bilharzia. See the companion essay: How to tell good Private Finance Initiatives from bad.

Smash the honey pot, don't refill it.