>On Feb 12, 2008, at 2:53 PM, Max B. Sawicky wrote:
>
>> Borrowing is just displacement of tax payments to a different time period.
>That never arrives, if you're always running deficits. And if you're running constant deficits, the debt and debt service burdens are going to rise inexorably. And as Jim O'Connor said somewhere, public debt increases capital's power over the state.>Doug
If time of payment never arrives, then borrowing is a free lunch. If you insist on seeing the period of interest payments as truncated (short of eternity), then the present value of interest is less than the money borrowed and spent. That's a redistribution from capital to the public sector.
Public debt need not grow faster than GDP, and if did bump up from 35 to 45, there would be no big deal.
All respect to O'Connor, but we could just as easily say higher public spending made possible by borrowing increases the command of the public sector over economic output. Seems to me a kosher Marxist analysis would hold that capital's power depends on the lack of mobilization of the w.c. Or: Capital's need to buy secure, low return Gov bonds reflects weakness vis-a-vis the state. If Capital was really kewl it would be exploiting -- in both senses of the word -- all sorts of private sector opportunities, not crawling around at what, 3.5%?