… is from pages 477 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):
There is this grand distinction between an individual borrower and a borrowing government, that, in general, the former borrows capital for the purpose of beneficial employment, the latter for the purpose of barren consumption and expenditure. A nation borrows, either to satisfy an unlooked-for demand, or to meet an extraordinary emergency; to which ends, the loan may prove effectual or ineffectual: but, in either case, the whole sum borrowed is so much value consumed and lost, and the public revenue remains burthened with the interest upon it.
DBx: As an empirical matter, yes.
Of course it’s possible in theory for government to borrow and then use the funds productively. And, no doubt, some such use by government of borrowed funds has in fact occurred and might still occur. But the general thrust of Say’s point is correct and relevant: government borrowing is overwhelmingly used to fund wasteful current consumption. Resort to deficit financing of government expenditures allows today’s citizens-taxpayers to spend the money of tomorrow’s citizens-taxpayers, many of whom aren’t yet born. And when any group of people gets to spend other people’s money, that money is seldom spent wisely.
