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Series:   Elements in Austrian Economics

Public Debt as a Form of Public Finance

Overcoming a Category Mistake and its Vices

Published online by Cambridge University Press:  26 March 2019

Richard E. Wagner
Richard E. Wagner
Affiliation:
George Mason University, Virginia

Summary

Economists commit a category mistake when they treat democratic governments as indebted. Monarchs can be indebted, as can individuals. In contrast, democracies can't truly be indebted. They are financial intermediaries that form a bridge between what are often willing borrowers and forced lenders. The language of public debt is an ideological language that promotes politically expressed desires and is not a scientific language that clarifies the practice of public finance. Economists have gone astray by assuming that a government is just another person whose impulses toward prudent action will restrict recourse to public debt and induce rational political action.
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Keywords

public debtpricing governmentcoordination failurescontract as promisedebt defaultB31D72E62H63P16

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Series: Elements in Austrian Economics
Online ISBN: 9781108696050
Publisher: Cambridge University Press
Print publication: 30 May 2019

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