… is from page 151 of University of Glasgow Senior Lecturer Craig Smith’s superb 2020 book, Adam Smith :
The mortgaging of future tax revenues and other such financial instruments were a genuine worry for [Adam] Smith. Government financial innovation was likely to be managed by spendthrifts or ‘projectors’ like John Law, Smith’s fellow Scotsman, whose speculation led to the near ruin of the French state. In addition to the possibility of corruption and mismanagement, such schemes had another fatal consequence: capital that might be lent to productive enterprises from the economy and passed into the unproductive hands of the state.
DBx: That government might be able to borrow at zero percent interest does not make government borrowing costless. The real resources used in the thus-funded government projects could have been used otherwise. Even if you have good reason to suppose that government will generally use these resources to better effect for the people as a whole than will private enterprises, you have no business asserting that government borrowing at low or even zero interest rates is “costless.”