The issue of the national debt has become more of a political wedge issue rather than an economic one. John Oliver, as usual, does an excellent job of explaining what we do and don’t know about the debt and its consequences.
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He spent about two thirds of the time (until around the 14 minute mark) complaining that it’s been Republicans who are more responsible for the national debt, who are therefore a bunch of hypocrites, etc. It is implicitly treated as a huge, serious-person problem that must be addressed somehow. But was he just concern trolling all of us about that or not? Seems like he meant it.
Then, the next several minutes discuss how much is too much, while claiming nobody has an answer and that there is legitimate good-faith debate to be had about it. Teach the controversy!
In the process, he says MMT (which gets less than 10 seconds in the entire segment) is a “more radical theory” than one which claims without evidence that we’ll reach some kind of tipping point … and it is merely at some higher ratio of the GDP than previously thought (presumably by past generations of professional debt-worriers). No mention whatsoever that the government is the one and only thing which can issue dollars, that it isn’t just using them like an ordinary currency user or borrowing them like an ordinary borrower). There was also no mention that the only justification needed for taxing the rich is that their wealth makes them far too powerful — doing it in order to “pay the debt” (the only reason he contemplated) is just plain silliness and has zero to do with that.
Then, a little time was spent at the end for some kids to read a script, over a bland bluegrass/pop track that sounds like it was ripped from an Apple commercial. I admit my eyes had completely glazed over by that point, so I don’t remember much of what was said.
Anyway … did it get rid of any misconceptions that some other people had? To me, it just felt like being irritated for about 22 minutes.
You want to know about the US national debt? You read Paul Krugman.
Like a broken record, I must chime in: people who talk about the national debt without talking about defense spending, simply are not serious about debt. So many us politicians and analysts natter on about how we can afford this or can’t afford that and practically none of them even mention the gigantic money-sucking black hole that is the pentagon budget. Dems and repubs both wring their hands about debt-consciousness and then turn around and vote the pentagon tens of billions of untracked, unbudgeted dollars that the pentagon didn’t even ask for. They’re not stupid (well, they have aides that can explain things to them) so I assume they’re just dissembling.
Marcus @3: AbsoMotherFuckingLutely! When the US budget for “defense” is almost half of ALL the money IN THE WORLD spent on “defense”, any legislator who won’t go near cutting some of that money doesn’t have a leg to stand on regarding the subject of debt.
cr @1: I can’t see the video, but going by this article, Oliver makes pretty much the same points about the debt as Paul Krugman does here.
Thumbrule for non-experts who don’t have the patience to sit through a 22 minutes video and read long analyses (ie people like me): not the height of the debt matters but the percentage the installment payments take from the annual budget. There is no hard limit, but very generally speaking the higher that percentage the worse -- because it’s not spend on investments.
These installment payments also must weighed against the expected benefits from the loans. Assuming that the coronacrisis is temporary those benefits are very high, so indeed there is not much to worry about.
Btw Krugman is factually wrong about “the full list of countries that ended up looking like Greece is … Greece.” At the moment, after the elections of last year (which resulted in a change of presidentship) and because of the willful mismanagement of the previous government Suriname faces rather similar problems -- with a sky high national debt being the prime cause, combined with zero economic benefits. This is rather awkward, because about 10 years ago during the global crisis that coincided with the Greek economic downfall Suriname did surprisingly well. Back then the country was much better off than Greece.
It should be noted -- I’ve pointed this out a few times before at this blog -- that (very unlike the Cypriot bank crisis, which was forgotten within two years thanks to EU intervention) -- it’s the economic policy favoured by the neoliberals (European meaning of thieword -- they’ve a lot in common with those complaining Republicans) that first increased the Greek problems and then slowed down recovery. One man especially responsible is the Dutch pseudoprogressive (he’s a member of Dutch Labour Party) Jeroen Dijsselbloem.
Rob, #5: Then so much the worse for Paul Krugman, who should know better than a comedian.
NYT article by Stephanie Kelton published yesterday