Friday, February 3, 2012

Debt Claims and the Purpose of Government

I am a very political person, but I don't intend to make it a focus of my blog. However, I have been thinking a lot recently about the core issue that nobody talks about underlying politics, and I wanted to share some questions with you and see others' opinions on the subject. What follows is a slight expansion of something I posted on Facebook earlier:

Both images from

Today I saw an info-graphic about that directly contradicted another chart I had seen recently, and it made me want to look into the matter. Part of the issue is to find reliable, politically neutral sources, but I think PolitiFact and are probably both good. In fact, the latter has an article on exactly this issue, though I found some of PolitiFact's information about how these things are calculated to be more elucidating: comparing Obama's debt to previous presidents and comparing the percentage of debt increase from Regan to Obama.

There certainly is a lot of political mud slinging about whose fault the debt is, and about what the relationship between tax policy, the economy, and Federal debt.  I also read an interesting article about the relationship between taxation rates and revenue rates as a percentage of GDP.  But is anybody really addressing the meat behind the competing claims?  Now, what I find most interesting is thinking about what matters most when it comes to debt.  Is anybody explaining what it means to pick one method of calculation over another?  Which is most important?  Is it the amount increase or percentage? What about inflation and GDP?

Once we've figures out what kind of debt increase is most fiscally impactful, what about the type of debt?  Do we worry about gross debt including Social Security, etc or "public debt"?  Who do we owe? Is it other countries, or is it citizens buying government bonds.  Is it better to issue bonds with a percentage interest paid or to tax to get the money?

At heart, what is the real issue with federal debt?  One way to make federal spending approachable is to compare it to household spending.  We all know that as individuals spending more than we can afford is really stupid.  This is why everyone is concerned about the debt, isn't it?  On the other hand, we consider certain types of personal debt to be good, such as home loans and student loans. Going into credit card debt in an emergency in acceptable (though not ideal -- better to have a savings fund), but the same debt over frivolous spending is not.  Additionally, the size of our "good" debt (such as the house and car we buy) has to be dictated by the size of our salary. Obviously, there is a correlation in how the government should operate, except that it is in some ways more like a business than an individual because the government provides services and charges rates. The question really is: what services should the government provide and what rates should it charge to do so? When is it ok for the government to make a long-term investment or take on emergency debt? Which services and expenditures are frivolous and which are necessary?  Shouldn't these be the questions we are asking?

What nobody really seems to be talking about is the core reason for the existence of government. Everything you tack onto it must be justified by this core principal, and politicians platforms are only talking about the satellite issues. What do you think government's core mission should be?


  1. I think the core mission should be to "protect the rights of the individual". The problem is defining what is a right. The right to live is pretty much universally agreed upon (fringe issues like execution and abortion excepted). So are basic property rights. But is access to modern healthcare a right? Is access to information about what ingredients are in your food a right? Is public education a right? Is there a right to smooth roads crossing the country? Is access to publicly owned natural areas a right? Is an income a right? These are issues that are outside what I'd define as the government's "core mission", but we've collectively decided as a society are things we want to take care of on a large scale. These are things that the private sector will not provide, cannot provide, or provides at a lower quality. The problem (as I see it), is that we are currently providing these sorts of services through the government, but unwilling to pay the full price for them.

    It *would* be nice if some of these things could be practically implemented on a state level. Not interested in sending your kids to public school, ok with taking your chances on your health, think pollution is no problem, and fine with not having your food inspected? Just move to State X and you can assume those tasks/risks yourself. Or you can live in a place where all of that is taken care of for you in exchange for higher taxes. Unfortunately, that often isn't practical, so people who do want those services and people who don't want those services (and all of the other things we finance publicly) have to compromise. What's the easiest way to make everyone happy? Provide the service for the people who want it, and don't make anyone have to pay for it -> debt.

    If the majority of the people in my country want service X, Y, and Z then paying for them is part of the price for choosing to live here.

    1. Certainly the US was founded on the idea that all people have certain inalienable rights (life, liberty, pursuit of happiness), but not all governments are founded on such ideas. In some places they don't or didn't believe that *everyone* has these rights. For example, feudal societies had a very different take on property rights, and on liberty, and didn't value all subjects' lives as of equal value, but the rulers gained legitimacy from the concept that they were protecting the people from war, etc. Communist states certainly don't have the same property rights, and often haven't shown have the same value on human life, yet they gain legitimacy from the idea that they are protecting the masses from wealthy and powerful oppressors, and from the idea that they have the consent of the governed. I'm not saying that either of these governments is ideal, but our government isn't exactly proving ideal either, and they still qualify as governments that *some* people want.

      As for services such as infrastructure or education, I'm not sure that they qualify as rights, but it does seem clear they have something to do with the responsibilities of government in some way. I think they must be part of some larger whole, such as being the government's responsibility to provide an environment in which its people can succeed or live well. I'm not really sure how to put it, but it seems a bit like keeping your house in order.