Theft and Debtors’ Prison
"Theft and Debtors’ Prison Rothbard and Evers view failure to pay a debt or other agreed upon future title transfer as “implicit theft.” Writes Rothbard:
The debtor who refuses to pay his debt has stolen the property of the creditor. If the debtor is able to pay but conceals his assets, then his clear act of theft is compounded by fraud. But even if the defaulting debtor is not able to pay, he has still stolen the property of the creditor by not making his agreed-upon delivery of the creditor’s property. 39
Rothbard is partly correct here. If, on the due date, the debtor is able to pay, then refusal to pay is theft. This is because the title to some of the money held by the debtor transferred to the creditor on the due date. At that moment, the debtor is in possession of the creditor’s property. Failure to turn it over is tantamount to theft or trespass—it is a use of the creditor’s property without his permission. But Rothbard’s view that it is theft “even if the defaulting debtor is not able to pay” is unjustified. Rothbard senses that this position could justify debtors’ prison, but tries to avoid this result by arguing that imprisoning a defaulting debtor goes “far beyond proportional punishment” and, thus, is “excessive.”40 But why? If failure to pay a debt is “implicit theft,” why can’t the “thief” be treated as such and punished?
The solution is to recognize that the defaulting debtor may not be punished simply because he is not a thief at all. If the debtor is bankrupt, there is no property to steal. The debtor is not “refusing” to turn over “the” money owed. There is no money to be turned over. How can there be theft of a non-existent thing? As discussed above, all future title transfers are necessarily conditioned on the thing’s existing at the specified transfer time. Failure to transfer something that does not exist cannot be theft; rather, one of the conditions for the title transfer has simply not been satisfied.41
Of course, contracts would normally contain default or explicit ancillary title transfers to address the unavoidable possibility of future default. For instance, a default title transfer that is ancillary to the main title transfer might be that the debtor also transfers title to $1100 plus accrued interest at any time after the original due date, if he is unable to repay on the due date, if and when he gets a paycheck or otherwise comes into money. Such ancillary provisions can be explicit in written contracts, or be assumed as default provisions in accordance with custom and context."
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