The US Government Is Not A Person

http://zachweinberg.tumblr.com/post/16076298468/the-us-government-is-not-a-person-and-why-government

by javery • 15 years ago

16 2 15 years ago

zachweinberg.tumblr.com

Quoting from the OP:

The US government only has to make sure that the US debt growth rate doesn’t exceed the growth rate of our tax revenue.

At what rate is the government debt currently climbing? Hint: hugely faster than our tax revenue.

Also, this ignores the fact that tax revenue is effectively limited by government spending, because when the government takes over something, it effectively crowds out the private sector.

World War II. Prior to the war, the US economy was in the absolute shitter. When the US decided to go to war, it borrowed money. LOTS of money. ... But the economy didn’t collapse due to our debt burden. In fact, the economy grew. A lot. US citizens experienced the biggest rise in income and living standard’s in our nation’s history.

There are a couple of problems here. First, as The Road to Serfdom tells us, this is easy to do when the entire country's priorities are aligned, as in an existential war. Such an incidence doesn't serve as an instructive example for more normal times.

But more importantly, the OP has the timeline wrong. In fact, at the end of the war, the Keynesians wailed that when the government stopped spending, the economy would wither. But in fact, when the government stopped its wartime borrowing, that is when our economy really soared. It was the end of the war and the end of the war financing blitz that brought the huge prosperity, because private industry was freed from the need to focus on materiel, and to build the products that people wanted instead.

TomOfTTB• 15 years ago

Honestly this is pretty straight forward wishful thinking. It certainly isn't Keynes (who believed in paying debts down during upswings). Here is the article's point in his own words...

"The US government only has to make sure that the US debt growth rate doesn’t exceed the growth rate of our tax revenue. As long as we take in money faster than we borrow, we can always meet interest obligations and grow faster than we owe money."

Interest is, by definition, paying money for nothing. You received money in the past and are now paying for the privilege of having enjoyed whatever that money bought you back then. But in the present tense Interest is money for nothing.

The author foresees a world where we are constantly paying more and more money and getting nothing in return (because the previous generation enjoyed whatever that money bought them). While our debt continues to rise because we're putting nothing towards the principle and in all likelihood still spending more than we take in.

That doesn't sound like a good future to me.

The US Government Is Not A Person

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