Debt and our Children
One regular topic these days in our political discourse is the lament that we are leaving a great burden of debt to our children, and this, of course, is truly lamentable and should not be done. Currently and most recently this concern has been expressed most passionately by the Republican party and its supporters due to the perceived rise in national public debt under Democrats. This complaint, coming from Republicans, is absurd for a number of reasons that have been discussed elsewhere, but there is another reason that I haven’t seen why the complaint is indefensible coming from Republicans. Indefensible because their policies are vastly worse for our children in regard to the debt under which they are being placed.
Consider first how we used money and what its function is in the economy. The basic, fundamental act in an economy is that one person does something useful for another, the second person does something useful in return. While doing something nice, or helpful for someone else is certainly a virtue, no one does, nor really can, work extensively to provide for another person in return for nothing. We people, to survive, need to trade. With simple barter, in prehistoric times, this is simple. Fred gives Barney a newly made spear, Barney gives Fred some of the meat from his hunt. This can work because it involves only two people. As societies become more prosperous and people become more specialized in the useful work they do, the trades need to involve more and more people so that simple barter becomes impracticable. Money is the elegant solution to this problem. So today instead of you providing some service that is of value to your employer and she provides some goods or services to you, your employer provides you with money that you can then use to complete the trades you need with other people. The money serves as an indicator of the useful labor you’ve done so that you can now trade it for someone else’s useful labor and the basic exchange, useful labor for useful labor, is retained.
But now consider the Republican policies of low taxes on the extremely wealthy, especially those who rely heavily on government services to earn their income. So, for example, Bill Gates (replace with Steven Jobs if you are a Mac user) did a great deal of useful (at least work that a lot of people found useful. This is the last nod I’m giving to Mac/PC debate) work in the 80s and 90s creating an operating system for computers. In return for this service he earned a great deal of money and is therefore able to command a great deal of other people’s labor, good and services in return for the great value he added via Microsoft. All is well and good so far. However, no matter how it pains Republicans to hear this, he did not do it on his own with no assistance from government. He needed the government to guarantee his intellectual property rights, he needed government to provide a special legal status with regard to liability to raise the capital he needed, in short he needed a great deal of assistance from government.
This in turn is fine, but then it is also fine to have government capture a portion of the revenue it helped to create and spend it in a manner to the benefit of the general populace. If instead we follow the low tax policies of the Republican party we are insuring that Bill Gates (and others in the same situation) will then be able to leave behind vast fortunes to their children, fortunes comprised largely of value produced by the government. This in turn means that these children and their children in turn will be able to benefit from the useful labor of the descendants of the less fortunate without doing anything of value for them in return.
Let me reiterate that last paragraph. It is true that during the 80s and 90s Bill Gates became wealthy by providing a useful product to many people. In return for the value he provided then much of the goods and services produced by the nation were provided to him, making his life very comfortable and secure. Due to Republican tax policies his children will continue to enjoy the results of your children’s labor without themselves needing to do anything in return. The only value we can expect to get from the Gates family was added in the 80s and 90s and yet for generations to come we, and our descendants, will need to provide for them getting nothing in return. This is truly leaving our children indebted for the future.
Now if it were the case that the people such as Bill Gates earned their fortunes entirely on their own, then perhaps there would be nothing to do about it. But as I point out above that is not the case. Rather they depend heavily upon Government support therefore the Government should be charging them money for the service. That would be the most important step to riding our children of future debt.