There is something distasteful about intergenerational politics, but there is something equally if not more distasteful about being left trillions in sovereign debt obligations to repay.
Imagine if your parents were billionaires! It would be bad enough if they squandered your inheritance on foreign adventures, bailouts of bankrupt companies, and overpayment of their non-productive employees. But imagine how you would feel if they could pass their debts on to you. This is how sovereign debt works, crudely speaking, and the sums involved are truly obscene.
In the United States, the national debt was $23.7 trillion as of 4 April 2020, a sum that does not yet take into account recent pandemic spending commitments, predominantly in the form of the (WHO?) CARES Act 2020.1 Even without this spending, debt levels equate to $191,172 per taxpayer, real obligations which will fall disproportionately on the young, the unborn, and even the unconceived.
In the United Kingdom, the national debt has just recently gone above the £2 trillion mark for the first time. Expect this figure to explode higher after the economy has imploded.2
The Japanese Government pays out the equivalent of $3870.87 in debt interest payments every second. These are obligations being redeemed by today’s Japanese taxpayers that should have been covered by their parents.3 But instead of owning the problem, the present generation is passing most of the debt burden forward to their children.
In Italy meanwhile, national debt to GDP is likely to hit 145%, approaching the point when the country is more or less bankrupt, and ‘austerity’ will happen whether Italians vote for it or not.
The ability to balance a budget is one of the most fundamental tests of a Government’s competence, and, in all but the most fallow years, a government should be looking to pay down its debts and/or to grow its reserves. For a brief period, the UK Conservative Government – which actually won an election on a pro-austerity platform – tried and was successful in pushing through a platform of austerity. However, in recent years, the fiscally conservative knees of the once Conservative party have buckled under them, and we’re back to infrastructure spending, ever bigger government, and fiscal profligacy.
Why did austerity become such a dirty word? What right-minded person would describe themselves as ‘anti-austerity’? To be anti-austerity is to despise your children and their generation. Why else would you leave them to face higher taxes, lower public spending, and the prospect of a sovereign debt default? Do you want the country they inherit to become the next Argentina or Zimbabwe? There are few nobler causes today in Western politics than austerity. It is the mark of decency in a person, or care for future generations, that they say, “I demand that you tax more than you spend so that our children don’t have to pay down our generation’s debt!” To demand the opposite is either ignorant or malicious.
Worse, the young today are being indoctrinated into campaigning for their future poverty and that of their generation. Through mass media and the university indoctrination system, they are trained to fight against austerity. In other words, they are trained to fight for cushy salaries for their professors and gold-plated state pensions for the Education-Medical Complex, and to ignore the fact that it is their hope of a half-decent state pension that is being thrown away.
Equally importantly, they are trained to hate the few politicians brave enough to stand up for austerity and against profligacy, and to vote for the cowards that will spend more than they exact in taxes. So hateful is the discourse on spending that the fiscally prudent are accused of “genocide” (see #torygenocide) if they are not spending enough on public services. Of course, by championing profligacy, they are laying the seeds of far greater loss of life further down the line. Who then do we accuse of “genocide”?
So, the young typically vote for high-spending parties in ignorance of the economic hardship they are laying up for themselves and their children in the future.
To be fair, there are many older and wiser heads particularly among the retired section of the population that vote for austerity against their own immediate personal interest, as profligate parties often offer to increase pension benefits. Perhaps that if sovereign bonds blow up, their pensions will be as naught anyway.
This should not be construed as a left-right issue. Whether public spending per se should be higher or lower is not the point. Both a socialist high-tax, high-spend party and a libertarian or conservative low-tax, low-spend one should be able to balance the budget. The problem for pro-austerity voters in the West is that most parties are high-tax and higher-spending. At most elections, austerity is not on the menu.
The most recent example of an extended decline in levels of national debt in the United States came during the 106th Congress, when there was a Democrat President in the White House and a Republican majority in the House and Senate. At that time, the parties were at war following the Clinton impeachment hearings. More typically, fiscal profligacy has been marked by extraordinary levels of bipartisan collegiality.
Then post-9/11 reconstruction came along; then the war on terror; then the Second Gulf War; then the Great Recession; then the ‘Climate Emergency’; and now, the Coronavirus Crisis.
It is historically ignorant to think that your children won’t face similar or perhaps worse crises. Present exigencies are invariably prioritised over future ones. Crises, even corona ones, are no excuse to abandon all caution in spending, while, for sure, in the fat years of the previous decade, Western governments should have been paying down their debt, and not splurging to bribe a dissolute electorate to vote them back into their grubby sinecures.
If Western democracies had had such foresight through the riproaring 2010s, if we had invested in industry and not squandered it all on consumption, perhaps today, we would have brimming national stockpiles, an industrial sector capable of dealing with corona, currencies that inspire trust, and maybe even a little gold in the treasury. Instead, we’re walking cloakless into that long, dark night.
The ultimate conceit is that we can transcend what is fundamental in society, the economy and international relations: you can build your economy on hype and hope for only so long, but ultimately the fundamentals will win out; cartelisation will lead to collapse; today’s spending will be paid for tomorrow by your kids; a state that debases its currency debases it future; and, those that cannot pay back, will be made to pay. These are just a few of the principles that any attentive reading of history will reveal to be fundamental.
We ignore them at our peril.