Don Boudreaux on Public Debt

EconTalk

Library of Economics and Liberty

Ethics, Philosophy, Economics, Books, Science, Business, Courses, Social Sciences, Society & Culture, Interviews, Education, History

4.7 • 4.3K Ratings

🗓️ 26 March 2012

⏱️ 84 minutes

🔗️ Recording | iTunes | RSS

🧾️ Download transcript

Summary

Don Boudreaux of George Mason University talks with EconTalk host Russ Roberts about the nature of public debt. One view is that there is no burden of the public debt as long as the purchasers of U.S. debt are fellow Americans. In that case, the argument goes, we owe it to ourselves. Drawing on the work of James Buchanan, particularly his book Public Principles of Public Debt: A Defense and Restatement, Boudreaux argues that there is a burden of the debt and it is borne by future taxpayers. Boudreaux argues that all public expenditures have a cost--the different financing mechanisms simply determine who bears the burden of that cost. Boudreaux discusses the political attractiveness of debt finance because the taxes lie in the future and those who will pay for them may not be clearly identified. The conversation closes with a discussion of the role of expectations in both politics and economics of debt finance.

Transcript

Click on a timestamp to play from that location

0:00.0	Welcome to Econ Talk, part of the Library of Economics and Liberty. I'm your host Russ Roberts
0:13.9	of George Mason University and Stanford University's Hoover Institution. Our website is econtalk.org
0:21.2	where you can subscribe, find other episodes, comment on this podcast, and find links to
0:26.5	another information related to today's conversation. Our email address is mailadicontalk.org. We'd
0:33.6	love to hear from you. Today is March 14, 2012, and my guest is Don Boudreau of George Mason
0:44.7	University. Don, welcome back to Econ Talk. Good to be here. Our topic for today is debt, particularly
0:52.5	the national level, and particularly focused on the U.S., although we may bring in some issues
0:57.5	related to debt around the world. But we want to try to get at what is a very complicated issue,
1:03.2	which is often called the burden of the debt. Is there a burden of the debt in the future? Some
1:11.4	people say that when the United States borrows money today and pays it back down the road, as long
1:16.9	as the bonds are bought by Americans, the phrase we often hear is we owe it to ourselves, and therefore
1:25.1	there's no debt burden. There's no burden of the debt on future generations. A lot of people find
1:31.1	that unintuitive, and we're going to see, talk about whether that's true or not, and we're going to
1:37.3	draw on some writing of Paul Krugman and also James Buchanan, I expect in talking about the
1:44.3	different views of debt. So I want to start with a family. A family that goes into debt to buy a
1:53.2	house. Is there a burden of that debt in the future? What's sacrificed and what's gained, I think,
2:01.8	is useful. Again, a lot of people argue that that's a bad analogy for debt at the national level,
2:07.6	but I want to start with the family level, the personal level, because I think it's a useful way
2:13.4	to set the debate and discussion. So when a family borrows money to go into debt and goes into
2:20.0	debt to say buy a house or have a lot of fun, is there a burden? What are the costs and benefits of
2:28.0	the family? Of course there's a burden. There's a cost. Jim Buchanan, we shouldn't get into it here,
2:37.6	because it gets way too esoteric. Jim Buchanan himself distinguished between the subjective cost
	...

Please login to see the full transcript.

Previous episode | Next episode

Disclaimer: The podcast and artwork embedded on this page are from Library of Economics and Liberty, and are the property of its owner and not affiliated with or endorsed by Tapesearch.

Generated transcripts are the property of Library of Economics and Liberty and are distributed freely under the Fair Use doctrine. Transcripts generated by Tapesearch are not guaranteed to be accurate.