John Tamny, RealClearMarkets
John:
Greetings from a member of a group of economists and pundits who, in your latest column, you call “sanctimonious,” “haughty,” and “eyes-periodically closed” – a group whose “self-regarding countenance obscures how little they understand markets.” We are a group, in short, who warn of the dangers of deficit financing of government spending and, thus, support annually balanced budgets.
I myself am of no consequence and likely guilty as you charge. But among the “deficit hawks” who you dismiss as deserving “bemusement, and perhaps scorn” are the majority of economists, including Adam Smith, who wrote prior to John Maynard Keynes. Post-Keynes, this group includes (to name only a few) Nobel-laureate economists James Buchanan and Vernon Smith, as well as the late William Niskanen and Buchanan’s brilliant student Richard Wagner.
Also in this group of individuals dismissed by you as economic ignoramuses is the Nobel laureate Gary Becker, who wrote in 2010 that “[t]he disturbingly large present and prospective fiscal deficits of the federal government receive much attention, and deservedly so.” One more member worth mentioning is Milton Friedman, who warned in 1981 that “[d]eficits are bad primarily because they foster excessive government spending – the chief culprit, in my opinion, in producing both inflation and slow economic growth.”
I continue to be mystified by your failure to understand that a sizeable portion of the excessive government spending that you rightly decry is fueled by the ability of today’s citizens-taxpayers to borrow money for today’s programs. Enabling today’s citizens-taxpayers to pass the bill for today’s programs onto future citizens-taxpayers, deficit financing allows people today to consume at the expense of people tomorrow, many of whom aren’t yet born.
You laugh at the claim that foisting debt on future generations is immoral. You do so by denying that anyone truly gains today from excessive government spending. You here, however, commit two errors. First, while such spending does indeed hurt the American people as a whole, it does indeed yield net benefits to the special interest groups on whom this spending is showered. It’s these groups specifically who are unleashed by deficit financing to free ride on future citizens-taxpayers.
Second, even if it were true that not a single person today benefits from deficit-financed spending, it remains immoral for us today to stick future generations with the bill for this foolish spending.
Many of your criticisms of excessive government spending and regulation are correct and insightful. But you unnecessarily diminish the impact to your larger, worthwhile efforts by your continued attacks on those knowledgeable economists and pundits who warn of the very real dangers lurking in deficit spending.
Sincerely,
Don
