Omake: The Petty Debt Crisis
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Omake: The Petty Debt Crisis
The History of The Petty Debt Crisis in the Myto Sector By Jiro Namagidir
Introduction
The Myto Sector took the Post-Yavin era by storm. Increased military patrols, economic development, and the rise of institutions like the Guild led to great wealth being attracted to the Sector. One would be forgiven that these rising tides were lifting all boats.
Unfortunately as history has shown, not every government makes decisions in line with their long term interests. A small category of worlds across the sector were led more in line with the exploitative economic policies common to other sectors at the time. These policies eventually culminated in the Petty Debt Crisis.
Aspects of Petty Debt Governorships
So what were these policies that led to the Petty Debt Crisis and why did Governors enact them? The main source can be attributed to a mindset cultivated among some Imperial circles. The belief that planetary governorships existed for Imperial taxes first, the Governor's personal enrichment second, and anything else a distant third. Treating their assigned postings more as a fiefdom than a position of stewardship as many other Myto sector Governors did. When viewed from that perspective, the following policy decisions in to make a twisted sort of sense.
Over specialized economies
Governors of what would later be called Petty Debts Worlds (or PD Worlds for short) tended to follow a similar economic model. They would be assigned a world, identify the most profitable or most influential good on that world, then dedicate most of the economy to producing that good to the detriment of all other industries. These specialized goods were often raw resources like a particular mineral or farmed plant so that the Governor could more easily direct as many sentients to work as possible in order to maximize output.
This method did have some benefits. It allowed these worlds to use their often minimal resources on their most profitable industries. Unemployment on PD Worlds was often low due to the favored industry always looking to expand and hire more workers. Bureaucracy was able to be kept small as there was just one main industry to keep track off. Taxation was also simplified as when almost everyone is working in the same sector in similar jobs, tax rates could be imposed more or less uniformly. If one were only to consider the positives, one could be mistaken for thinking this was a sound economic model.
Unfortunately there were also severe downsides to the level of overspecialization PD Worlds engaged in. While specializing in one good allowed for worlds to export a lot of that good, it also drastically increased import needs as other domestic industries suffered. The PD Worlds' economies were also rendered incredibly brittle. Prone to boom or crash with the fluctuating prices of their chosen good. All these factors capped the growth of PD Worlds while leaving them vulnerable to financial instability.
Lack of Economic Investment
As PD Worlds were focused on producing a singular good, other aspects of their economy suffered. Governors spent minimal budget on things like social services and utilities not directly involved in the world's main industry. In their minds, it appears any part of their planet not dedicated towards their favored industry was a waste of funds.
This left both the private and public sector anemic outside the extremely bloated exception. Utilities like water and power suffered chronic stoppages. Independent businesses received next to no government support or were even suppressed under the justification of "stealing workers". Environmental damage also spiked as any regulations were quickly removed in the name of increasing profits. These factors led to a rise of food shortages and health crises breaking out across PD Worlds.
That being said, it is not like the entire budget could be dedicated to the world's main industry. The second largest item on the budget on most PD Worlds was often listed as "discretionary spending" in some form or another. As one can imagine this item did little to promote economic development on PD Worlds beyond luxury import businesses.
Poor Debt Management
With PD Worlds entirely beholden to the wider commodity market, it comes to little surprise that they suffered from chronic debt issues. What tended to happen was that the price of the specialized product would fall, causing an increase in the World's debt. Then prices would inevitably rise, but the Governors would use the profits to double down on investing in the main industry rather than paying off the previous debt. This led to a vicious cycle of consistently growing debt and deficits that would ultimately culminate in the Petty Debt Crisis.
Who owned the debt also resulted in problems. Governors of PD Worlds would often force their citizens to purchase "Patriot Bonds". Failure to purchase these bonds would often result in consequences varying from loss of employment, losing access to public services, to outright imprisonment for "suspicion of disloyalty". A citizen could not even hope to cash in their bond as they would often have them "annulled" as punishment for a minor crime.
What credit Governors couldn't acquire from their citizens would come from increasingly suspicious sources at increasingly rising interest rates. These deals often involved certain remote tracts of land on the PDs Worlds put up as collateral. This final part of the loan agreements would be what ended up dooming a majority of PD Govenors once these transactions came to light.
Asset Seizing
Citizens of PD Worlds had difficult lives. Forced to work in an industry with a singular company that paid little and was also the government. Food prices were often high even on Agriworlds as farmland was being used to produce cash crops for export. Most were kept in a state of poverty teetering on outright destitution and a social safety net was nothing more than a fantasy.
Yet somehow Governors of PD Worlds managed to make things worse. Personal debt was a fact of life for sentients on PD Worlds as they struggled to make ends meet. Governors would use this debt as a justification to seize both person and property at blasterpoint. Entire neighborhoods were cleared out to make way for yet another personal project for the Governor. This constant upheaval heavily discouraged private saving and investment as most saw little reason to put Credits toward a future that could be taken away so easily.
Loyalty Purchasing
With policies such as these, how did Governors of PD Worlds keep ahold of their positions? How did they avoid some staging an uprising against their rule? This was mainly accomplished through a practice referred to as Loyalty Purchasing.
Political power was kept in the hands of a small group of elites which used the Imperial Military to suppress any hint of dissent. These elites were not necessarily chosen by merit or lineage, but rather those elevated were sentients the Governor could charm or intimidate into complete obedience. In fact most cultural and traditional interest groups that existed prior to the Governor's appointment were ruthlessly oppressed to prevent a potential rival power bloc.
These elites were kept in line through a stream of selective benefits and gifts. Housing in separate and comparatively opulent communities, large quantities of luxuries unavailable to the rest of the population, and exemptions from the toil and taxation the rest of the world was saddled with. Everything the unfavored were deprived of, the favored got heaped upon them.
Governors of PD Worlds formed a collection of sycophants completely reliant on them and invested to suppressing the rest of the world. This patronage was dependent on keeping the Governor's favor and enacting his will, lest they be cast into the destitute masses below them eager to tear them to shreds. This fear of the lower classes resulted in most governments and elites on PD Worlds collaborated fully with the Governor's policies that led to the Petty Debt Crisis in order to maintain their precarious status.
This did not mean said upper classes were unified. Factions beneath the Governors formed using the same methods of patronage to spread their influence. Power struggles would often take place that would see departments and institutions undergo frequent quiet purges that left them beholden to the ascendant faction but weakened over the long term. Faith in your faction was always greater than faith in the overall government on PD Worlds.
Sector Wide Reactions
Naturally this rapid accumulation of debt and sliding decline did not go unnoticed by the wider sector. Despite efforts to suppress their financial situation, eventually news of these worlds' potential bankruptcy had spread. Other worlds and players in the sector began to take notice, and action.
The most immediate outside group to interact with the Crisis was the Constellation of Power. A cooperative of neighboring systems that banded together focused on producing power cores at below out of sector import rates. The CoS made cores for buildings, appliances, and industrial equipment to support the economic boom throughout the sector. This industrial concern took the Petty Debt Crisis as a chance to expand their markets.
The CoS adopted a strategy of selling cheap, quality power cores and their accompanying machines to all sections of society in nearby PD Worlds in exchange for significant quantities raw resources being produced there. The elites wanting to maintain their lifestyles and producers wanting to improve their output, accepted. This led to a further focus on raw resource production and away from domestic industrialization as they became new markets reliant on the CoS.
The sector government also did not sit idly by while these worlds slid into financial ruin once it noticed the direness of the situation. However the sector government's awareness of the severity of the Crisis was delayed by the actions of the previous Moffs. The negligence of Moff Tarry, and the focus on ladder climbing of Moff Hiral, meant the building Petty Debt Crisis progressed went relatively unnoticed by the Myto's institutions until Moff Las assumed the office.
Once reports finally reached the Moff's desk, Myto's government was left with an uncomfortable choice. While some of the debt was owned by illegal or otherwise fraudulent lenders, a large portion was owned either by local companies, offworld companies, or through bonds held by the planet's population. Allowing the debt to remain as is would cripple the planetary governments' budget for decades to come. However canceling the debt too recklessly would ruin lender confidence on the local level at minimum and could even damage the reputation of financial credibility Moff Las had been painstakingly cultivating.
After removing the Governors for gross incompetence in their duties, an order was issued for an emergency audit of the afflicted worlds to get proper estimates of the damage. While the debts were substantial for the small planets, it was comparatively minor to a sector. As such a restructuring of the Petty Debts was declared with the sector government acting as a guarantor. This not only reassured creditors that they would eventually get their Credits back and reduces interest rates, but also gave the sector government immense leverage over the PD worlds in the coming years.
In order to help PD Worlds recover, Guild resources were dispatched to begin development programs on those worlds in order to stabilize them at minimum. However upon arrival Guild personnel found they had little to work with as both the private and public sector had been gutted by the Petty Debt Crisis and the decisions that led to it. Unfortunately the legacy of overspecialization has resulted in estimates of former PD Worlds lagging behind their neighboring contemporaries for decades to come.
——
A lot of people would assume a time of sector wide prosperity would encourage smart financial decisions. A lot of people also underestimate how short sighted political leaders can be. Plenty of governments in history being given a chance for long term prosperity decide to immediately kneecap themselves in exchange for some benefit for those in power.
That fact the political culture the Empire encourages this kind of short term prioritization among its elite only increases the likelihood. Figured I would give Las some nearby examples to reference for that book on the Empire's shortcomings he is writing.
Crossposted on SB and SV
The History of The Petty Debt Crisis in the Myto Sector By Jiro Namagidir
Introduction
The Myto Sector took the Post-Yavin era by storm. Increased military patrols, economic development, and the rise of institutions like the Guild led to great wealth being attracted to the Sector. One would be forgiven that these rising tides were lifting all boats.
Unfortunately as history has shown, not every government makes decisions in line with their long term interests. A small category of worlds across the sector were led more in line with the exploitative economic policies common to other sectors at the time. These policies eventually culminated in the Petty Debt Crisis.
Aspects of Petty Debt Governorships
So what were these policies that led to the Petty Debt Crisis and why did Governors enact them? The main source can be attributed to a mindset cultivated among some Imperial circles. The belief that planetary governorships existed for Imperial taxes first, the Governor's personal enrichment second, and anything else a distant third. Treating their assigned postings more as a fiefdom than a position of stewardship as many other Myto sector Governors did. When viewed from that perspective, the following policy decisions in to make a twisted sort of sense.
Over specialized economies
Governors of what would later be called Petty Debts Worlds (or PD Worlds for short) tended to follow a similar economic model. They would be assigned a world, identify the most profitable or most influential good on that world, then dedicate most of the economy to producing that good to the detriment of all other industries. These specialized goods were often raw resources like a particular mineral or farmed plant so that the Governor could more easily direct as many sentients to work as possible in order to maximize output.
This method did have some benefits. It allowed these worlds to use their often minimal resources on their most profitable industries. Unemployment on PD Worlds was often low due to the favored industry always looking to expand and hire more workers. Bureaucracy was able to be kept small as there was just one main industry to keep track off. Taxation was also simplified as when almost everyone is working in the same sector in similar jobs, tax rates could be imposed more or less uniformly. If one were only to consider the positives, one could be mistaken for thinking this was a sound economic model.
Unfortunately there were also severe downsides to the level of overspecialization PD Worlds engaged in. While specializing in one good allowed for worlds to export a lot of that good, it also drastically increased import needs as other domestic industries suffered. The PD Worlds' economies were also rendered incredibly brittle. Prone to boom or crash with the fluctuating prices of their chosen good. All these factors capped the growth of PD Worlds while leaving them vulnerable to financial instability.
Lack of Economic Investment
As PD Worlds were focused on producing a singular good, other aspects of their economy suffered. Governors spent minimal budget on things like social services and utilities not directly involved in the world's main industry. In their minds, it appears any part of their planet not dedicated towards their favored industry was a waste of funds.
This left both the private and public sector anemic outside the extremely bloated exception. Utilities like water and power suffered chronic stoppages. Independent businesses received next to no government support or were even suppressed under the justification of "stealing workers". Environmental damage also spiked as any regulations were quickly removed in the name of increasing profits. These factors led to a rise of food shortages and health crises breaking out across PD Worlds.
That being said, it is not like the entire budget could be dedicated to the world's main industry. The second largest item on the budget on most PD Worlds was often listed as "discretionary spending" in some form or another. As one can imagine this item did little to promote economic development on PD Worlds beyond luxury import businesses.
Poor Debt Management
With PD Worlds entirely beholden to the wider commodity market, it comes to little surprise that they suffered from chronic debt issues. What tended to happen was that the price of the specialized product would fall, causing an increase in the World's debt. Then prices would inevitably rise, but the Governors would use the profits to double down on investing in the main industry rather than paying off the previous debt. This led to a vicious cycle of consistently growing debt and deficits that would ultimately culminate in the Petty Debt Crisis.
Who owned the debt also resulted in problems. Governors of PD Worlds would often force their citizens to purchase "Patriot Bonds". Failure to purchase these bonds would often result in consequences varying from loss of employment, losing access to public services, to outright imprisonment for "suspicion of disloyalty". A citizen could not even hope to cash in their bond as they would often have them "annulled" as punishment for a minor crime.
What credit Governors couldn't acquire from their citizens would come from increasingly suspicious sources at increasingly rising interest rates. These deals often involved certain remote tracts of land on the PDs Worlds put up as collateral. This final part of the loan agreements would be what ended up dooming a majority of PD Govenors once these transactions came to light.
Asset Seizing
Citizens of PD Worlds had difficult lives. Forced to work in an industry with a singular company that paid little and was also the government. Food prices were often high even on Agriworlds as farmland was being used to produce cash crops for export. Most were kept in a state of poverty teetering on outright destitution and a social safety net was nothing more than a fantasy.
Yet somehow Governors of PD Worlds managed to make things worse. Personal debt was a fact of life for sentients on PD Worlds as they struggled to make ends meet. Governors would use this debt as a justification to seize both person and property at blasterpoint. Entire neighborhoods were cleared out to make way for yet another personal project for the Governor. This constant upheaval heavily discouraged private saving and investment as most saw little reason to put Credits toward a future that could be taken away so easily.
Loyalty Purchasing
With policies such as these, how did Governors of PD Worlds keep ahold of their positions? How did they avoid some staging an uprising against their rule? This was mainly accomplished through a practice referred to as Loyalty Purchasing.
Political power was kept in the hands of a small group of elites which used the Imperial Military to suppress any hint of dissent. These elites were not necessarily chosen by merit or lineage, but rather those elevated were sentients the Governor could charm or intimidate into complete obedience. In fact most cultural and traditional interest groups that existed prior to the Governor's appointment were ruthlessly oppressed to prevent a potential rival power bloc.
These elites were kept in line through a stream of selective benefits and gifts. Housing in separate and comparatively opulent communities, large quantities of luxuries unavailable to the rest of the population, and exemptions from the toil and taxation the rest of the world was saddled with. Everything the unfavored were deprived of, the favored got heaped upon them.
Governors of PD Worlds formed a collection of sycophants completely reliant on them and invested to suppressing the rest of the world. This patronage was dependent on keeping the Governor's favor and enacting his will, lest they be cast into the destitute masses below them eager to tear them to shreds. This fear of the lower classes resulted in most governments and elites on PD Worlds collaborated fully with the Governor's policies that led to the Petty Debt Crisis in order to maintain their precarious status.
This did not mean said upper classes were unified. Factions beneath the Governors formed using the same methods of patronage to spread their influence. Power struggles would often take place that would see departments and institutions undergo frequent quiet purges that left them beholden to the ascendant faction but weakened over the long term. Faith in your faction was always greater than faith in the overall government on PD Worlds.
Sector Wide Reactions
Naturally this rapid accumulation of debt and sliding decline did not go unnoticed by the wider sector. Despite efforts to suppress their financial situation, eventually news of these worlds' potential bankruptcy had spread. Other worlds and players in the sector began to take notice, and action.
The most immediate outside group to interact with the Crisis was the Constellation of Power. A cooperative of neighboring systems that banded together focused on producing power cores at below out of sector import rates. The CoS made cores for buildings, appliances, and industrial equipment to support the economic boom throughout the sector. This industrial concern took the Petty Debt Crisis as a chance to expand their markets.
The CoS adopted a strategy of selling cheap, quality power cores and their accompanying machines to all sections of society in nearby PD Worlds in exchange for significant quantities raw resources being produced there. The elites wanting to maintain their lifestyles and producers wanting to improve their output, accepted. This led to a further focus on raw resource production and away from domestic industrialization as they became new markets reliant on the CoS.
The sector government also did not sit idly by while these worlds slid into financial ruin once it noticed the direness of the situation. However the sector government's awareness of the severity of the Crisis was delayed by the actions of the previous Moffs. The negligence of Moff Tarry, and the focus on ladder climbing of Moff Hiral, meant the building Petty Debt Crisis progressed went relatively unnoticed by the Myto's institutions until Moff Las assumed the office.
Once reports finally reached the Moff's desk, Myto's government was left with an uncomfortable choice. While some of the debt was owned by illegal or otherwise fraudulent lenders, a large portion was owned either by local companies, offworld companies, or through bonds held by the planet's population. Allowing the debt to remain as is would cripple the planetary governments' budget for decades to come. However canceling the debt too recklessly would ruin lender confidence on the local level at minimum and could even damage the reputation of financial credibility Moff Las had been painstakingly cultivating.
After removing the Governors for gross incompetence in their duties, an order was issued for an emergency audit of the afflicted worlds to get proper estimates of the damage. While the debts were substantial for the small planets, it was comparatively minor to a sector. As such a restructuring of the Petty Debts was declared with the sector government acting as a guarantor. This not only reassured creditors that they would eventually get their Credits back and reduces interest rates, but also gave the sector government immense leverage over the PD worlds in the coming years.
In order to help PD Worlds recover, Guild resources were dispatched to begin development programs on those worlds in order to stabilize them at minimum. However upon arrival Guild personnel found they had little to work with as both the private and public sector had been gutted by the Petty Debt Crisis and the decisions that led to it. Unfortunately the legacy of overspecialization has resulted in estimates of former PD Worlds lagging behind their neighboring contemporaries for decades to come.
——
A lot of people would assume a time of sector wide prosperity would encourage smart financial decisions. A lot of people also underestimate how short sighted political leaders can be. Plenty of governments in history being given a chance for long term prosperity decide to immediately kneecap themselves in exchange for some benefit for those in power.
That fact the political culture the Empire encourages this kind of short term prioritization among its elite only increases the likelihood. Figured I would give Las some nearby examples to reference for that book on the Empire's shortcomings he is writing.
Crossposted on SB and SV
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