3 ms·

What about the moral implications that deficit spending is inter-generational taxation? I think that is a clear case of taxation without representation.

wtvanhest 15y ago
This will most likely be fixed with high inflation, but it is a concern.
nhaehnle 15y ago
Inter-temporal taxation does not exist in any meaningful way. Future citizens do not send taxes to the present government. More importantly, when have you last consumed a good that was produced in the future? In real terms - and that is what ultimately matters - there is no transfer between different times (well, there is some amount of transfer from the past to the present, but this is usually not what people complain about ;)). Now what you probably meant to say is this: The existence of the debt implies that in the future, there will be interest payments. Most likely (unless the Modern Monetary Theory revolution in education takes place before then), people in the future will be lead to believe that these interest payments come from tax payers. This has potential moral implications because there is a tendency that those citizens who overwhelmingly receive the interest payments in the future are not the same as the ones who pay the taxes (also in the future). Absolutely. But this is more about equity and distribution than it is about the fact that there is a debt. I have also commented on this before: http://news.ycombinator.com/item?id=2730278 http://news.ycombinator.com/item?id=2730278 Edit: I have to correct myself. One could perhaps talk about some form of inter-temporal taxation in the context of using non-renewable natural resources. However, I personally think that it's still better to talk about that in terms of sustainability rather than taxation.
- gaius 15y ago
  Well, not in a literal sense perhaps, but practically, if you are liable for a debt that was incurred before you were even born, let alone of voting age, how is that any different?
  - nhaehnle 15y ago
    The question is: Who are you liable to? You are never liable to some dead person, but to some other living person. If, in the future, there are people who are carrying some kind of burden because of the government debt established today, then there will also be, in the future, people who are benefiting from the government debt established today. This is why I consider it a red herring to think of the debt as an inter-temporal issue. It is, if anything, at most an distributional fairness issue among the people living at any one point in time. You might worry that in the future, the people won't have the tools at their disposal to fix those distributional fairness issues. However, since a monetarily sovereign government has the ultimate control over the interest rate that it pays on its debts (and the flows of interest payments are what is most relevant), this is not a concern. I realize that this last part is very counter-intuitive if you're used to thinking only in terms of options available to the currency user. Read about how interest rates and liquidity operations of the central bank actually work: http://pragcap.com/resources/understanding-modern-monetary-system http://pragcap.com/resources/understanding-modern-monetary-s... The bottom line is: If the political will to do it is there, those distributional issues can always be fixed in the medium term by manipulating the interest rate. One might have to switch over to using fiscal policy for inflation control, and capital constraints to limit runaway bank lending, but some economists argue that this is preferable anyway.

wtvanhest 15y ago

This will most likely be fixed with high inflation, but it is a concern.

nhaehnle 15y ago

Inter-temporal taxation does not exist in any meaningful way. Future citizens do not send taxes to the present government. More importantly, when have you last consumed a good that was produced in the future? In real terms - and that is what ultimately matters - there is no transfer between different times (well, there is some amount of transfer from the past to the present, but this is usually not what people complain about ;)). Now what you probably meant to say is this: The existence of the debt implies that in the future, there will be interest payments. Most likely (unless the Modern Monetary Theory revolution in education takes place before then), people in the future will be lead to believe that these interest payments come from tax payers. This has potential moral implications because there is a tendency that those citizens who overwhelmingly receive the interest payments in the future are not the same as the ones who pay the taxes (also in the future). Absolutely. But this is more about equity and distribution than it is about the fact that there is a debt. I have also commented on this before: http://news.ycombinator.com/item?id=2730278 http://news.ycombinator.com/item?id=2730278 Edit: I have to correct myself. One could perhaps talk about some form of inter-temporal taxation in the context of using non-renewable natural resources. However, I personally think that it's still better to talk about that in terms of sustainability rather than taxation.

gaius 15y ago
Well, not in a literal sense perhaps, but practically, if you are liable for a debt that was incurred before you were even born, let alone of voting age, how is that any different?
- nhaehnle 15y ago
  The question is: Who are you liable to? You are never liable to some dead person, but to some other living person. If, in the future, there are people who are carrying some kind of burden because of the government debt established today, then there will also be, in the future, people who are benefiting from the government debt established today. This is why I consider it a red herring to think of the debt as an inter-temporal issue. It is, if anything, at most an distributional fairness issue among the people living at any one point in time. You might worry that in the future, the people won't have the tools at their disposal to fix those distributional fairness issues. However, since a monetarily sovereign government has the ultimate control over the interest rate that it pays on its debts (and the flows of interest payments are what is most relevant), this is not a concern. I realize that this last part is very counter-intuitive if you're used to thinking only in terms of options available to the currency user. Read about how interest rates and liquidity operations of the central bank actually work: http://pragcap.com/resources/understanding-modern-monetary-system http://pragcap.com/resources/understanding-modern-monetary-s... The bottom line is: If the political will to do it is there, those distributional issues can always be fixed in the medium term by manipulating the interest rate. One might have to switch over to using fiscal policy for inflation control, and capital constraints to limit runaway bank lending, but some economists argue that this is preferable anyway.