This weekend I’m participating in a seminar for some of the Mercatus Center‘s 2014-2015 Adam Smith Fellows. The readings for this seminar are from the works of my late colleagues Jim Buchanan and Gordon Tullock. Among the included Buchanan works are some of his papers on public debt – papers that explain, in part, that the burden of public debt isn’t in the least lessened if “we owe it to ourselves” (rather than it being owed to foreigners).
During today’s second morning session, my colleague Pete Boettke (who also is participating in this weekend’s seminar) wisely and wittily observed that
part of the problem with deficit financing of government spending that Buchanan wanted to highlight is that the most poorly organized interest group is sperm.
Indeed so. Even under the best circumstances collective decision-making is poisoned by free-rider and other public-goods problems. And the dosage of such poison is significantly increased when governments finance today’s spending with debt. The reason is that the burden of repaying that debt falls on future taxpayers, many of whom are today still just sperm and eggs. Because today’s flesh-and-blood sentient voters and politicians are able, with deficit financing, to push the burden of paying for today’s spending off onto future generations, today’s spending tends to be higher and more careless than it would be if those who are doing today’s spending are also those who will pay for today’s spending.
(And, let me repeat, this size and harm of this burden is not remotely changed by changing the nationalities of the holders of the debt.)
I should add also that my colleague Chris Coyne is doing a splendid job as discussion leader.
