I tried, in the last post, to show exactly how you can get tripped up by playing fast and loose with words like "individual", "generation", and "time period" in this national debt discussion. The words of these terms and what people are refering to matter. Individuals in the future are richer and poorer in the example. The nation at a specific time period is not richer or poorer. Whether a "generation" is richer or poorer depends on whether you definte that like an individual (i.e. - Iris is a future generation and she is clearly poorer), or more like a time period.
Now I'll be the first to admit - Paul Krugman didn't define his terms at the outset, but it always seemed pretty clear to me what he was saying. Was he saying that individuals who live in the future couldn't be hurt by debt? Well that's just silly because in several examples and in the conclusion of the first post he said just the opposite of that! Plus it would be a ridiculous claim in general and Krugman isn't in the habit of making ridiculous claims.
His second post was all about how individuals in the future could be made poorer by debt, but not the nation. If anyone wasn't sure after that, his third post mused on whether the debt would "force America as a whole to spend less than it would have if the debt hadn't existed". The issue here is clearly the relationship between debt and national income. On this point my models and Bob's models unambiguously come out with the same answer - Krugman's answer: national income does not change, but individuals in the future can be richer or poorer as a result.
The Krugman claim was very simple: nation as a whole stays the same, although future people can be richer or poorer relative to the counterfactual.
Can someone explain to me how this isn't exactly what we've all converged on?
And now Bob is offering me to bet against the position I've been trying to expound upon, which says to me we probably need to close shop on this. He says he's genuinely surprised at my response. I'm surprised he's surprised, but I'll trust he is. Like I said in my very first post in response to Nick, I think the big disagreement here is over who thinks what - not over the debt. Even Don Boudreaux was sounding like he was basically making the Krugman claim with a few public choice nuggets thrown in, so I'm not personally convinced this was ever that huge of a divide in the first place.
Empire of the Institute
3 hours ago