Public Principles of Public Debt: A Defense and Restatement

James M. Buchanan.
Buchanan, James M.
(1919- )
Display paragraphs in this book containing:
1 of 18
Card Catalog Information
First Pub. Date
Indianapolis, IN: Liberty Fund, Inc.
Pub. Date
First published in 1958 by Richard D. Irwin, Inc. Foreword by Geoffrey Brennan.
The text of this edition is copyright ©: 1999, Liberty Fund, Inc. Picture of James M. Buchanan: File photo detail, courtesy Liberty Fund, Inc. Photograph from Pressens Bild, Stockholm, Sweden.
About this Book

"Many a citizen will never be able to understand fully the problem of the public debt, for it is too complicated for the average layman. On these technical matters he will have to accept the word of the experts." This statement by Professor Seymour Harris has two noteworthy implications. It is, first of all, a rather severe indictment of the ability of economists to fulfill their educational task. Secondly, it suggests that the experts themselves are agreed on the "truth."

On the face of it, the problem of public debt does not seem complicated. Indeed it seems quite simple when compared with the problem of the circular flow of goods and services in a money economy. Yet it is in regard to the latter problem that great insight has been imputed to businessmen and lay leaders in times past. Critical historians of economic thought may legitimately question the depth of genuine understanding about the unemployment problem contained in the Mercantilists' or Protectionists' "fear of goods" or even in the Reverend Malthus' predictions of a general glut. But economists, especially during the last quarter century, appear to accept almost universally that common everyday opinion on the public debt is fundamentally wrong. Any challenge to this relative unanimity stands in danger of being rejected at the outset. Surely, we are inclined to say, the vulgar ideas about the public debt are grounded in almost pure fallacy, fallacy which is so simple and obvious that we expose it in the early chapters of our elementary textbooks. We use the common lay reasoning on public debt as a particularly good example of the fallacy of composition before we lead the sophomore on to the more stimulating endeavors of serious study. Everyday man-on-the-street opinion on this subject continues to remain less sophisticated than that achieved by the first-week sophomore. The first steppingstone toward economic literacy has not been passed until the whole set of fallacies in the commonly accepted ideas on the public debt is thoroughly exposed, understood, and replaced by the "true" relations. [From the text]