Candour demands that even the most enthusiastic apologists of contemporary Western democracies admit that the latter come much closer to Aristotle’s definition of oligarchy than to his depiction of democracy. There simply is not, at least according to Aristotle, enough Demos in our Democracy today. Put differently, even though Socrates would not have been poisoned by the British or French Parliaments for smuggling subversive ideas into the mind of the young (protected, thankfully, by an impressive panoply of juridical authority), our electorates (‘We, the People’ in the language of the American Constitution) exercise no power over daily life which might be comparable to that of Athenian citizens. Moreover, there is a deep sense in which the power actually exercised (by both citizens and their elected representatives) has been declining steadily with every twist and turn of our recent political history.
Is it any great wonder that we are increasingly unwilling to put our energies into the political process? Is it surprising that a democratic process less redolent of a ruling Demos than of unaccountable oligarchy is ripe for neglect in the icy hands of apathy?Link
The US can never be forced to default on debt denominated in its own currency. One might reasonably ask, even if the above is true, won’t an increasing debt level leave us in danger of national default? No, it will never do so as long as the debt is in a money we are permitted to issue. This should be the least controversial statement one can make about the debt, yet I often find that it is the most! Link
3. Deficit spending is not inherently inflationary. Another common worry that issuing more currency to finance deficit spending (which is basically what we do, though in a roundabout manner) could be inflationary. This is true, it could be. But the circumstances under which that would occur are also those where we have the least incentive to deficit spend, i.e., at very low levels of unemployment. Only during WWII have we done this. For three consecutive years during the war, joblessness was below 2%, and yet we continued to run huge deficits to finance the war effort. Did this drive prices higher? Absolutely, and it was only because of wage and price controls and rationing that it was not worse. Running such large deficits was clearly ill-advised from an economic standpoint because it raised demand when supply could not go any higher; but our goal was political and so we saw this as a necessary evil.
A second bundle of terms that deserves further attention is that clustered around investment, expenditure and speculation. It should be noted immediately, for this is crucial to what follows, that these terms carry with them implicit moral connotations. Investment implies an action, even a sacrifice, undertaken for a better future, while speculation (here in the financial rather than intellectual sense) immediately arouses a sense of mistrust. And while investment evokes a future positive outcome, expenditure seems merely an outgoing, a cost, a burden.
Investment and expenditure are distinguished from each other according to a strict economic rationale, a distinction required by the way in which the national accounts are set up. But this distinction is cross-cut in popular parlance and ordinary political debate by another understanding. Together they produce rich soil for the construction of political attitudes. Thus, in the national accounts, investment is money laid out for physical things such as buildings and infrastructure, while expenditure is money used to pay – for instance – for the wages of people operating the services for which the investment provides the physical possibility. So building a new school is investment, paying the teachers, the administrators and the dinner ladies is expenditure. (Pause for a moment, and ponder the gender implications of this distinction.)
This distinction, moreover, is often cross-cut with another – that between public and private. On this understanding, money advanced by a private firm to further its profit-making intentions is seen as a worthwhile investment, while money advanced by the state, whether for infrastructure or for employment in schools or the health service, is seen as only increasing the deficit, because it is paid for out of taxation.
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