Wednesday, December 19, 2007

Understanding Government: Debt

One of the more notable features of government is debt.

When some entity spends more than than it takes in, the result is a deficit. The sum of deficits and surpluses is debt.

Governments are more likely to accumulate debts than private entities. One reason for this is that the people who run the government are not using their own money. Thus they are less likely to act responsibly. Another reason is that government has the power to tax, so it can pay its debts by force.

Democracies are more likely to accumulate large debts than other governments. The reason for this is that in democracies, there is public pressure to redistribute money.

The "national debt" of the United States in 2007 was officially about 9 trillion dollars. However, this figure ignores the unfunded liabilities of entitlement programs like Medicare, Medicaid, and Social Security. With these figures included, the present value of the real national debt is approximately 59 trillion dollars. That's $59,000,000,000,000.





As Kipling put it in The Gods of the Copybook Headings,

In the Carboniferous Epoch
we were promised abundance for all,
By robbing selected Peter
to pay for collective Paul;
But, though we had plenty of money,
there was nothing our money could buy,
And the Gods of the Copybook Headings
said: "If you don't work you die."
Government debt is dangerous to prosperity. Government should spend less and avoid accumulating debts.

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