A Note on the Burden-of-Public-Debt Question

by Don Boudreaux on January 7, 2012

in Budget Issues, Debt and Deficits, Other People's Money

Suppose the government of A gives each adult citizen of A between the ages of 18 and 65 the right to force another randomly chosen adult citizen of A to work six months out of every year for the first adult’s benefit.  Every adult has this right – which government steadfastly enforces whenever that right is exercised – to command the labor (or the fruits of the labor) of another adult.  No adult is exempted from the obligation to labor for another adult.

Would resource allocation be unchanged from what it would be in the absence of this policy of mutual conscription?  Does the answer change by recalling that each adult citizen of A, after all, devotes his or her conscripted labor only to another adult citizen of A?  What if we specify that the total aggregate labor hours worked under this policy is the same as it would be in the absence of this policy: would resource allocation then be the same as without this policy?

Isn’t deficit financing of government spending equivalent in some essential ways to the above hypothetical?  The ability to free-ride on others’ labor (or, more generally, on others’ resources) leads to the misuse of that labor (or those resources).  This fact isn’t altered if those doing the free-riding are citizens of the same country as are those who are free-ridden upon – or by the fact that each free-rider is also freely ridden upon by someone else.

….

Suppose that the policy at first gave each adult the right to six-months of labor supplied by another adult, but required each adult who exercises this right to personally confront the chosen conscriptee.  Perhaps natural human squeamishness about personally conscripting others to our purposes would prevent this right from being exercised fully; some people – because of squeamishness, ethical objections, or whatever – would refuse to exercise the right.  Recognizing this failure to exercise the right as fully as possible, government then offers its services as intermediary between conscriptor and conscriptee; no conscriptor ever again actually has to see face to face, or even speak to, his or her conscriptee.  Government serves as an effective intermediary, shielding concriptors and conscriptees from ever encountering each other.

Would the frequency of the exercise of this right of conscription change as a result of government offering to serve as an effective agent for each consciptor?

….

Suppose celebrated scholars publicly argue (in the face of growing public skepticism of the merits of the system of mutual conscription) that, because we conscript only ourselves, the net burden of this policy to us is practically zero.  Would anyone – should anyone – accept this argument?

…..

There are many differences between my hypothetical here and real-world deficit financing – perhaps most significantly being the fact that those persons whose labor (or bundle of fruits) is conscripted in the real-world for the benefit of other individuals are not themselves able to conscript their conscriptors.

But I fancy that the above hypothetical might have some usefulness.

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