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nemo dat quod non habet

Friday, December 21, 2012 2:50

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(Before It's News)

Nemo dat quod nom habet is one of those useful pithy Latin sayings which lawyers, businessmen and politicians should have engraved on their hearts. It means that you cannot give what you have not got. That may sound like a statement of the bleeding obvious, as we used to say in Poplar, but as obvious as it may sound it is surprising how many times people banks and politicians try to give what they have not got.

In banking terms the banks give what they net got by using a process of leverage. In business terms traders sell what they have not got with all too depressing frequency. But those you disobey the statement of the bleeding obvious more thoroughly are the politicians.

All over the developed world countries like the USA, the United Kingdom, Ireland, Greece, Spain, Portugal, France, Italy – I shall stop because the list is too long – have paid out of taxes more than they received in taxes. Most of the payments went to those who are not wealthy in “benefits” but some went to the wealthy in larger benefits.

There is a limit to what you can spend and that limit is in what is in tyour wallet or your purse. You can borrow to make up a deficiency but borrowing should be used to secure an asset and the borrowing should be repaid over the lifetime of that asset. That is what we do when we take out our mortgages to buy our homes.

Governments however have been borrowing to pay benefits. It is a bit like borrowing to go on holiday – you can do it once but if you do it time and time again you never repay the borrowing but your children do, one way or another, unless you go bankrupt.

Nations do not like to go bankrupt because it is for them a step into the unknown, and so in an effort to comply with nemo dat quod non habet they have to reduce the amounts that they spend on benefits. This reduction is presented as “cuts”.

It is easier to give than to take away but ultimately you cannot give what you have not got and in these times of custs we should all remember that.

Filed under: climate change Tagged: business, economy, government, nemo dat quod non habet, politicis, poplar