… is from pages 479 of the 1971 Augustus M. Kelley reprint of the 1880 Sixth American edition of Jean-Baptiste Say‘s 1803 A Treatise on Political Economy (Traité d’économie politique):
National loans of every kind are attended with the universal disadvantage of withdrawing capital from productive employment, and diverting it into the channel of barren consumption.
DBx: Say might be fairly accused here of overstatement – but just barely. It is, of course, possible for funds borrowed by governments to be used productively, and history surely offers some examples of such productive borrowing. But because (as Say understood) government borrowing today is paid for by citizens-taxpayers tomorrow, today’s citizens-taxpayers who can easily resort, through government, to borrowing are especially likely to overspend. No one spends other people’s money with great care, and when many of the people whose money is being spent today aren’t yet born, the spending today of borrowed funds is especially likely to be extravagant and wasteful.
None of what’s said here implies that government spending that’s funded with current tax revenues is invariably wise, prudent, and productive. Of course it isn’t. But at least some subset of today’s citizens-taxpayers feel somewhat the burden of the higher taxes that they pay to fund such spending. But with deficit financing of government spending, today’s citizens-taxpayers do not at all feel the burden of the taxes that must eventually be collected somehow in order to pay for this spending.
