Saturday, October 12, 2019

Deficits Aren't Bad, Capitalism Is

Earlier this week CNN announced that the federal budget deficit was nearly a trillion dollars a year, an all-time record. Puzzlement was expressed at the relative lack of public concern about this alarming matter.

There is no need for puzzlement. Deficits are fine if they are incurred to improve our economic position over time. Virtually everyone goes into debt, for example, to purchase a house rather than pay rent in an apartment forever, and this is only sensible. Of course, one must make sure that one's mortgage does not exceed one's reasonable capacity to pay it, but there is no issue of principle at stake. 

With the U.S. government, debt is even less problematic. As Adam Smith noted in Wealth of Nations, no nation in history has ever paid off its debt, for there is no need to. As long as deficits are used to keep employment and production sufficiently high, they are a necessary stimulus to economic health.

On the other hand, going into debt to rich bankers who make profits by selling worthless paper is obviously a prescription for disaster. (See Frank Scott's wonderful "Variation on a 2008 Theme," published on this blog July 11, 2012, for a hilarious summary of this madness.) And we should take notice that the corporate media does not oppose such looting operations by "too big to fail" banks, only raising the issue of "excessive" budget deficits when there's a threat that government spending may benefit ordinary people (Social Security, Medicare, etc.)  But when we're going into massive debt to benefit the already obscenely wealthy, whose profitability is directly tied to taxpayer guaranteed bailouts, our media lapdogs are as silent as the proverbial lamb.

There is nothing the least "puzzling" in this. The rich stick us with unpayable debts to force us to keep giving them our working lives. That's teamwork under capitalism. 


Chris Cillizza, "The 2019 federal deficit is almost $1 trillion. No one seems to care." CNN Online, October 9, 2019