February 21, 2010
FREE NATIONS DEEP IN DEBT:
To thrive we need to distinguish between morality and economics: The current battle between the economists may seem to be about economics. It is not. It is about the morality of debt (Will Hutton, 2/21/10, The Observer)
Nothing is more certain to arouse the armchair moralist than too much debt. Every principle of fair and moral dealing seems to be offended. It is mortgaging the future. If fair rewards are the proportional and due result of one's efforts, debt is a means of unfairly living high on the hog today only to pay a bigger bill tomorrow. Borrowing to buy an asset such as a home or to fix an unanticipated piece of bad luck such as dry rot is more than justifiable. What is amoral is to try to escape the limits of what one fairly earns, worse still to pass the bill on to your children.If private debt arouses these sentiments, fast-growing public debt is even more provocative. We are now having our future mortgaged for us. It is public imprudence, a nation living beyond its means. If, on top, the annual deficit is the largest in Britain's peacetime history – as it will be this year – and it has been delivered by a discredited Labour government under a prime minister widely held to dissimulate to the point of outright dishonesty, then moral concern swells to outrage. Politicians are at their most effective if they are crusading with the moral force behind them. Debt is an issue on which David Cameron and the Conservatives feel they can take the high ground. We cannot go on like this, they insist. The deficit must be cut as a matter of moral urgency, more deeply and faster than the government plans.
However, debt morality should never be confused with good economics. Good economics attempts to deliver a functioning economic system that works for all its members. Necessarily, credit and debt play crucial economic functions, allowing the system to manage the inevitable mismatches between flows of revenue and costs over time.
The dying nations of Europe are obviously a different kettle of fish, but for America, the current debt spike tracks that of the British to defeat Napoleon and us to defeat Slavery, Nazism and Communism. Today we're just finishing the coda to that Long War, defeating Islamicism, with the corresponding temporary debt increase. That ability to borrow to fund warmaking is a major part of why the democracies of the Anglosphere keep winning so easily.