Mainstream left- and right-wingers propose different ways governments should get out of their current debt crises.
Here in Canada, conservatives of the SUN TV variety argue that the debts of the American and Canadian governments be tackled by slashing government social benefits and welfare spending, ending “bloated government” (whatever that means), and getting government spending back to a “manageable” size. If only government spending was reduced, raising taxes, and the harmful consequences of doing so, could be avoided.
On the other side of the two-dimensional political spectrum we have the hysterical liberal-left that argues governments could easily pay for healthcare, retirement benefits, and public services for everyone were revenues increased. What is lacking is the political will to tax the wealthy. Many left-liberals point to massive profits being made by large corporations such as banks and oil companies. They maintain that these excess profits could be taxed to fill in government revenue shortfalls.
What this debate usually comes down to is a “tax the rich” versus “cut welfare” argument in which both sides are left grasping for statistics typically related to military and social spending, company profits, and various other debt and deficit figures. For example, John Robson at Sun News claims US defence spending was less than 5% of GDP in 2000. Johnson writes that leftists can’t argue as they often do that what he calls “Defence” (Empire) has played any meaningful role in the present debt crisis. (Although, according to Wikipedia, spending on the US Defense Department now amounts to about 20% of US GDP.)
This number game, though, is besides the point. Governments, by their very nature, tend to go into debt. Doing so allows politicians to be elected by making promises they won’t be able to keep. Creating government debt is nothing more than bribing people with their own money by passing public works projects, social welfare schemes and other long-term plans that are financially unsustainable at the cost of future generations. The Social Security as a Ponzi scheme allegory is exactly right. By the time most people realize that politicians’ promises will be broken it is too late: the politicians are out of office, retired, golfing, or dead. Either way, as far as I know, in most western democracies there is no legal way to pursue a politician for breaking a campaign promise or sacrificing future generations to debt slavery.
Giving a government more revenue just adds to this problem and this is where sappy leftists miss the point. It allows a government to put more assets on “its” balance sheet which can simply be used as more collateral with which to borrow. No state would choose not to borrow and go more into debt, given the opportunity.
Personally, I think there is good reason to believe a large part of multinational corporations’ profits, depending on the industry, are subsidized by state activity. For this reason I am suspicious when I hear about banks or oil companies declaring record profits. But two wrongs don’t make a right. The proper route to take would be to shrink government to such a size where it can no longer give any aid to business. The best solution, of course, would be to get rid of the state all together.
The cause of western governments’ current debt crisis is not the “entitlement culture” or even overseas empire, although, once started they can contribute to the problem of government growth and indebtedness. They are inevitable consequences of the institutionalized, industrial scale machine of mass violence that is the state.