A couple debt updates

- I emailed Paul Krugman this morning pointing him to Nick Rowe's post and asking him if he was a #1 or a #4. I think he's clearly a #4 and his point was never to prove the "logical impossibility" of anything. Nick thinks he's a #1. We've both marshalled quotes from his blog. But this is silly - we need to just ask him. We'll see if he responds - he's been responsive to me over email in the past.

- Bob Murphy provides an example here. It's very similar to Nick's but I actually think the exposition is a little clearer. Bob also goes to great lengths to note that he's had his mind changed on this one, and he's been very obliging to Krugman, which he should be credited for. Still - I'm not quite sure what to make of this one. I'd be much more interested in a model where debt is funding investments that will help the second generation rather than pay for the consumption of the first. And it would be nice to have a growing economy. What Bob illustrates is obviously a burden on future generations, but as Steve Landsburg and I point out, the burden is the transfer itself - not the public debt. If Bob and Nick want to say "transfers from one person to another are a burden on the people that it is transferred from", then I would say "no duh, guys!". But that's a very different proposition from asking whether public debt is inherently burdensome. As Krugman would say, that's a different kettle of fish. I don't think anyone was ever disputing that.

- Now in this post it's clear that it's the transfer itself that Bob is really concerned about. If that's your concern, fine. We always knew that some of us think that the state is a legitimate way for free people to pursue their own prosperity, and some of us didn't. Bob conceives of it as the state telling Isaac (his second-generation rational actor in his model) what to do. I'd argue it's more like Isaac and Abraham (the first generation rational actor) getting together and deciding what to do together. But that's not really relevant (except as a rhetorical flourish to advance Bob's point). If his point is that government allocation (1.) can be zero-sum, and (2.) can be distortionary, I obviously agree - particularly in the case of transfer payments... but I thought we were talking about the nature of the public debt.



Commenter Major_Freedom appears to agree with Bob's focus on the nature of government in this post, although he doesn't have anything like Bob's character. Responding to me, he writes: "I think it’s very, very reasonable for you to find yourself a different career, because obviously you’re more concerned with how to advance the violent state and hurting innocent people’s lives than you are with economic science."

Yes - that's what I'm interested in MF. Hurting innocent people. Geez - now I remember why I've been enjoying Bob commenting over here and talking with him over email so much more ever since the CIA shut down his blog his blog has been having technical problems.