Don Boudreaux of Cafe Hayek is having a good time with Paul Krugman’s assertion that “U.S. debt is, to a large extent, money we owe to ourselves.” This bold claim comes in the midst of yet another of Krugman’s seemingly infinite number of columns touting deficit spending as a panacea for what ails the American economy.
Boudreaux’s posts (to date) are here, here, here, here, here, and here. I will not try to match Boudreaux’s deep and weighty commentary on Krugman’s outrageous assertion. Instead, I offer the following non-academic observations for Mr. Krugman’s consideration:
1. Who are “we”? If government borrows money and spends it on goodies for Congressman X, Y, and Z’s districts, how do I get my cut? Or does the happiness generated in Congressman X, Y, and Z’s districts simply radiate in waves across the country, eventually reaching me and making me feel better?
2. I know of no magical power that enables government to ensure that deficit spending absorbs unemployed resources without diverting already-employed resources from productive uses. So this leads me to ask why it wouldn’t be better to take the borrowed money and flush it down a toilet, rather than sending it to Congressman X, Y, and Z’s districts.
3. Anyway, if the borrowed money makes (some) people in Congressman X, Y, and Z’s districts better off, why is it that “we” (i.e. the rest of us and/or our descendants) end up repaying the debt that made those others better off? I don’t understand how I “owe it to myself” when (a) I didn’t ask to borrow the money and (b) I gained nothing as a result of the borrowing.
You might claim that my personal wishes are of no account because Congress and the president are duly elected by majorities of voters. But that is tantamount to saying that Congress and the president possess a kind of omniscient super-consciousness that somehow overrides the harm, hate, and discontent that flow from their acts. I don’t think you’d agree with that, given your views about the many and various “sins” committed by the Bush administration, usually with the connivance of Congress. Or, perhaps only Democrats possess omniscient super-consciousness. Yes, that must be it.
With regard to my not having gained as a result of borrowing, perhaps you think that I ought to be happy simply because (some) people in Congressman X, Y, and Z’s districts are happier as a result of deficit spending. Perhaps I should be, but I am just a curmudgeon who has 12 grandchildren who will be less well off because of the extra taxes that I, their parents, and/or they will pay for the privilege of making some strangers happier. Are you telling me that you — or anyone — has a way of making everyone happier by making a lot of people less happy? Or are you telling me that you don’t care who is made less happy as long as government does what you think it should do? My money is on the latter proposition.
If I do, indeed, owe some portion of the U.S. debt to myself, I hereby forgive my share of the debt and absolve myself of any obligation to pay it.