National debt matters,but dealing with it is a matter of timing. During a recession or hard times, a country should borrow more, not less, and spend the money on investing in roads,bridges, education, in fact anything that is a long-term investment in the future of the country. Then, when the economy picks up and the government starts to have a surplus, that’s the time to cut the debt. This, you might think, is common sense.
It should be obligatory for every candidate for public office to have had a course in economics. In both the US and the UK there are far too many people who have had no training in economics or the law and constitution of their country. They take an ideological stance without regard to established economic realities. Some call this “liberty”.
Epicureans believe in education, and after education, training for their future jobs. People who constantly undermine established scientific principles for private monetary gain cannot be Epicureans. What they are you can decide for yourself.
The British government, for one, is not really concerned about debt. Their priority is rolling back the welfare state, and creating money-making opportunities for their rich friends.
True, but you’ve overlooked the reason for recessions in Western countries. For the USA it is primarily the trade deficit that has killed the economy. Free trade is great in theory, but in practice the USA has not replaced the jobs lost to China with alternative industries. I suspect the same is true for the UK. Australia is relatively lucky, we have minerals and agriculture to export.
But no amount of government stimulus can overcome a trade deficit. I don’t think the USA can afford any more stimulus or bailouts or Obama socialism. The US seems to be headed for default on its loans because there is no sign of a balanced budget ahead.
These days it’s hard to know what a person means by “socialism” and “Obama socialism” is even murkier. Try recalculating the deficit by subtracting the cost of the Iraq and Afghanistan military disasters.
Of course, the trade component of the deficit is a factor and it’s true that no one’s “socialism” has focused on replacing jobs lost to other countries but the killer deficit grew from financing catastrophic wars.
Posting from Whitney:
It is certainly true that if interest rates were to increase, the fiscal deficit in the US would grow significantly, given the size of the public debt. So we need to reduce the public debt as a share of GDP. And a balanced budget could be helpful at an appropriate time as long as it is not set up as some sort of norm. For a growing economy with a reasonable public debt, there is no reason to have a balanced budget on average much less in a given year.
“The simplest summary of the state of knowledge in macroeconomics is that nobody knows anything”. John Lanchester, London Review of Books, January 3, 2013