Here’s a letter to The Economist:
You dangerously downplay the burden of government debt by writing that “[w]hen the national debt is owned by its citizens, a country in effect owes money to itself” (“After the disease, the debt,” April 23rd).
In offering this assertion you make no more sense than you would have made had you written “when the national amount of theft is done by its citizens, a country in effect steals money from itself.” I’m not equating thievery with government borrowing; unlike stealing, there are legitimate reasons for governments to borrow. But I am saying that, just as the costs of thievery do not disappear or shrink if thieves steal only from fellow citizens, so, too, do the costs of government borrowing not disappear or shrink if the government borrows only from fellow citizens.
Despite the frequent use of plural first-person pronouns when discussing a country, “we” (for example) Americans are not a single, sentient entity with “our” budget, “our” income, “our” assets, and “our” liabilities. And “our” government is not “us.” We are, instead, 331 million different individuals, living in 128 million different households each with its own budget – and outside of our households combining our efforts together, in countless different ways, in millions of distinct firms and other organizations each with its own budget. Only one of these organizations is the United States Government.
Therefore, to assert that government debt held by citizens is debt that “a country” owes “to itself,” and is thus not akin to the debt burden that is had by a private household, is mistakenly and misleadingly to anthropomorphize a nation.
Donald J. Boudreaux
Professor of Economics
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030