Wednesday, April 7, 2010

The Burden of the National Debt

I am still very ignorant about economics -- I have only read Economics in One Lesson so far in my studies -- but I would still like to raise a moral question I have in regards to the debt of the United States.

It is without question that the United States is in a massive amount of debt and that the politicians will incur yet more. Unless the appropriate measures are taken, the US may experience total economic destruction. My question is: To how much of the debt does the United States have a *real* obligation to pay back, and from whom?

One thing that disturbs me in discussions about the debt is when people break it down to how much each individual citizen (born and yet to be born) will have to pay in order to pay back the debt in full. I know that in my personal situation, and in millions of others, I have not elected to take part in these financial "contracts" with other countries and whatnot. For the most part, if not entirely, the politicians have incurred debt with money that either wasn't theirs to begin with (taxes), money that has no value (fiat), or money that doesn't even exist. Unless I'm improperly taking this literally, I think it amounts to nothing in the moral context since these contracts were formed without the participants' permission.

As a parallel, take the imprisonment of the American Japanese during WWII. After they were released, if I recall correctly, they had to start over economically since their property had been distributed. In truth, while it would certainly be a mess to disentangle, the Japanese victims should have gotten their property back since having had it stolen from them does not mean that their right to it had been eliminated. While the new owners may have been innocent in receiving the property, their innocence does not mean they have a right to that property since it was distributed by an entity which had no right to distribute it in the first place.

To apply this to the national debt, is it not the case that the debt cannot be morally satisfied by taxing citizens? To force someone into a contract is a contradiction which invalidates its standing. I understand that the debt must be paid by somehow since it has been incurred, but I don't understand how it can be paid back by moral means.

All I know is that when the government interferes into the economy it leads to messes like these that are difficult to intellectually dissect.

3 comments:

Jason said...

In the same way that phasing out welfare programs will involve paying out some money or providing some services for some period of time to those who paid into it, some taxes will be necessary to pay back foreign debts during the transition to a fully free country.

When we borrow money from a legitimate semi-free country, such as England or Japan, we have to pay it back. If we were to borrow an astronomical amount, comparatively higher than even today's standards, like $100 trillion, the country we borrowed it from would be at fault for entering into a contract it should have known was illegitimate. In that case, we would come to some deal with that country to pay them back a lesser but fair amount.

Generally though, we do have to pay back the full debt amount, or negotiate with the country to reduce the amount.

Although you did not personally support the debt, you are still responsible for your country's political policies. Just like if your country becomes an aggressor and you get attacked by a free country, you will suffer for your country's wrongdoings. That is why politics is important.

Morality fully applies only to free men on long range issues. It still has to guide a country correcting its mistakes in the short run, but in that context it can only be applied partially--the question becomes "How do we get to a free society as quickly as possible, with the least disruption, respecting individual rights as much as possible, so that morality and personal responsibility can fully apply to man's life?".

Steve D said...

"I have not elected to take part in these financial "contracts" with other countries and whatnot."

Good, then you are not responsible for it. Period. Otherwise the choices of others would have the moral power to reduce you to slavery.

However, it may still be prudent to pay this back.

C.W. said...

The obligations of the U.S. government are the obligations of the U.S. government hense forth, and its successors. It is functioning with the law, laws which are not very good, but still do not meet the test of a rogue legal system. The debts of our government will need to be met, as well as its other obligations.

It is my view that these obligations are only a major problem as long as the country remains a mixed economy. As long as it does, the obligations will continue to grow and become increasingly difficult to meet. At some point, there will be bankruptcy. The Europeans are just now having to face these problems in a small way in Greece, etc. Notice that their attempts to solve their debt problems are very minor and still vigerously opposed by their welfare populations. Europe will have face bigger problems soon and the conflict will become more heated.

On the other hand, if the U.S. should attempt reverse its trend and more toward freedom, the debt and other obligations would not be a problem. I wrote about this in some detail. see: http://krazyeconomy.blogspot.com/2009/09/flight-of-fancy-not-fantacy.html.