C'mon people, I didn't say this was likely or even possible. This is a thought exercise.
I completely agree, but part of a thought exercise is pointing out the problems isn't it?
In response to Maizeman's 3 big barriers:
1) There is not positive modern precedents for reparations between nations even after wars.
--> all of this is unprecedented, we will need a new playbook for global epidemics from now on...and appropriate penalties to avoid "moral hazard".
But reparations are not unprecedented, it's just a lack of positive precedents. Like the example from WWI.
What moral hazard do you think needs to be addressed? Usually that phrase is used in the context of a person or organization taking on excess risk because they're confident that if bad things happen someone else will come along to save them from the consequences of their actions.
3) How exactly would any reparations be extracted from China? (Short of war between nuclear armed belligerents.)
--> see above renegotiation/cancelling of debt. This has been multiple times in the last 100 years during times of economic upheaval.
Renegotiation/cancelling of debt as reparations? I cannot actually thing of any examples of this, could you talk about the specific ones you have in mind?
Certainly there have been cases of debt being renegotiated or cancelled, but these have been to stave off default. If the USA ends up looking like Greece after the global financial crisis or Argentina in 2001 where we are unable to service our debt it is within the realm of possibility that countries might renegotiate the terms of our debt as a better alternative to complete default on the debt.
However:
1) that would mean the economy would need to be in orders of magnitude worse shape than it is now.
2) wouldn't be about reparations but about out nations trying to get some money out of the USA rather than none.
3) the key difference between the USA and Greece/Argentina is that our debt is in a currency we control, so a debt crisis in our country is much more likely to result in inflation as the Fed repurchases US government debt with newly created dollars than it is to result in a risk of sovereign default.
Even if that happened, in the current interest rate environment it wouldn't save us all that much money.
Even a 1% drop in servicing that 1.1 Trillion Dollars in debt would make a dent in our yearly deficit.
In 2019, before the coronavirus crisis in the USA, our annual deficit was $984B/year. The current yield on the 30 year US treasury is 1.33%. I'm guessing a lot of the debt China owns are actually 10 year ones which have a lower interest rate, but if all are 30 year bonds, that means China's 1.1 trillion dollars of US government debt is currently paying $15 billion dollars a year in interest. A one percent reduction in the cost of servicing that debt would be $0.15 billion dollars a year, which would amount to less than 1/5,000th of our annual deficit.
So yes, it would make a dent, but it would be a rather small one.