Wednesday, February 18, 2009

National Debt History

"Still, it's the trend that is worrisome, to put it mildly. There have always been two reasons for adding to the national debt. One is to fight wars. The second is to counteract recessions. But while the national debt in 1982 was 35% of GDP, after a quarter century of nearly uninterrupted economic growth and the end of the Cold War the debt-to-GDP ratio has more than doubled.

It is hard to escape the idea that this happened only because Democrats and Republicans alike never said no to any significant interest group. Despite a genuine economic emergency, the stimulus bill is more about dispensing goodies to Democratic interest groups than stimulating the economy. Even Sen. Charles Schumer (D., N.Y.) -- no deficit hawk when his party is in the majority -- called it 'porky.'"
Our political economy is again beginning to show symptoms of the sclerosis Mancur Olson studied in THE RISE AND DECLINE OF NATIONS.


Tim Canon said...

I am convinced that this will happen to any political economy after the relevant interests figure out, over time, how to game the system. The only solution is to change the game, which would require something like a meeting every so often to review/change the constitution or whatever guidelines the country may have. Even then, the system will probably be undermined at some point. I just don't see any escape from this trend.

Craig T Glackman said...

I agree with Tim. After watching a short video on the types of government (dictator, democracy, republic) it seemed apparent to me that as the Romans started out witht a republic, it turned into a democracy and then failed. We too started out with a republic, we now have a democracy and are quickly on our way to socialism. It almost looks to me like a cycle? As Tim said, once "they" figure out how to play the game, the game changes, it seems, always to end up down the corrupt path. I am not sure how to keep it from cycling again and again.