Here are two questions for people who dismiss concerns over internally held government debt on the grounds that “we owe it to ourselves” – that is, here are questions for those who counsel “Oh don’t worry; we owe that debt to ourselves” whenever someone expresses concern over debt held by subjects of the government that borrowed the money and that is, therefore, formally obliged to tax its subjects in the future to repay the debt:
- If Mega Corp. gets a monopoly on the sale of (say) all food and beverages in America, should we dismiss concerns over Mega Corps.’s monopoly power if Mega Corp. is a privately held corporation all of whose shareholders are American citizens? After all, in this case we pay the monopolistically high prices to ourselves.
- If RentSeekers, Inc., – a company that produces (say) footwear in the U.S., and whose shares are owned exclusively by Americans – persuades Uncle Sam to triple tariff rates on shoes imported into the U.S., are economists naive to condemn such trade restrictions? After all, we pay the higher shoe prices to ourselves.
Of course there are differences between government borrowing and each of the two hypotheticals posed above. But are those differences ones that, once grasped by the cognoscenti, reveal concerns over internally held government debt indeed to be quaint and naive while concerns over monopolistic pricing by producers who are fellow citizens remain exposed as genuine dangers worthy of criticism and corrective action?