FBXL Social

I've never been opposed to using public debt to pay for public goods, but there's three caveats to that:

1. You take out a loan, you have a plan to pay back the loan in your lifetime. If you take out a loan and never intend to pay it back, you're selling your kids into slavery. Many such cases.

2. Never "privatize" public goods. If a private investor wants to make a thing, they can pay to make a thing.

3. Public debt for public goods, not consumption. The past decade has seen trillions of dollars of public debt we're never going to pay back that was spent on direct payments to businesses and individuals solely for consumption.

Unfortunately, these three points mean most public debt violates my principles.

People will make arguments that intergenerational debt is ok because it's important to the economy. As I consider intergenerational debt (particularly of either consumption spending or of public goods that are then sold to the private sector) as slavery, then the same argument applied for slavery proper -- people didn't want to give up the institution of slavery because it was important to certain economies.

Now perhaps you might go "But how are we going to manage macroeconomic swings?" -- and I'd answer that if you really want that, then there's only one real way: A sovereign wealth fund that is built up in the good times and drawn down in the bad times. You pay as you go. The benefit of this is that you only really want to draw down that fund if you need to, and once it's gone it's gone. What we're seeing right now is like someone addicted to debt: During the bad times they rack up debt, but during the good times they rack up debt too because they have no reason to feel the pain of the spending they want to do if they can just pass it off until tomorrow.

If you actually don't like subsidizing the capitalist class, then all this is obvious. Handing massive amounts of money to the capitalist class because they lend you money is just making people who do have money richer. My investments in that regard have been doing great, which is good for me but bad for western civilization.

One of the sleights of hand used in the 21st century is "Debt to GDP". The debt can grow forever, but if the economy keeps growing number goes down even though it isn't really. That sounds great, as long as economic growth continues to rise forever. For advocates of degrowth, or for people ringing alarm bells about the current unavoidable demographic collapse, it's a rationalization that works until it stops working: You can take crystal meth to work harder and make more money and rationalize that you're not spending more on meth as a % of your income, but if you lose your job suddenly you're spending tons of money on meth compared to your income and you're addicted to meth.

An example of this is Japan. Japan was said to have been in a "lost decade".... 20 years ago. Structurally, Japan looked super-rich because they spent so much money through debt, but now they're levered up on debt and they can't solve the problem because their demographics won't let them magically grow.