Alleged deficit hawks like Paul Ryan, the new Speaker of the House of Representatives, sometimes talk about the balanced budget like some sort of epic fiscal nirvana. Candidates are routinely elected to office in America promising to balance the budget, which is always “out of control” and an imminent threat to collapse the country. National debt clocks function like fear-o-meters, piling on anxiety that the future means a bitter cold cell in the poorhouse.
Economists sometimes like debt and sometimes don’t, and everybody wants social security to be solvent. But as the writer going by Holly Wood points out at Medium, many of the current heroes of American capitalism run big debt and never balance their budgets. Amazon, for example, mostly keeps reinvesting its revenue in its plans for a better future — sort of like what America should do, the writer suggests. Now America is not a business, so the analogy has its fault lines. And lots of admirable businesses don’t function like Amazon — Apple, for example, turns a handsome profit (if $10.7 billion a quarter is handsome). But Wood takes the stand that austerity is anti-prosperity, as governments go. That works, of course, as long as investors’ faith in the government’s fiscal credibility is unhindered by its debt load. The debt has to be marketable. But all economists believe that if the road to the next town is broken, you have to fix it. Even if you have to borrow a few bucks to do it.