财政悬崖的教训

Jan 21, 2013 Robert J. Barro

美国剑桥—我从米尔顿·弗里德曼那里学到了很多东西，其中之一是，政府的真正成本是其支出，而不是其税收。换句话说，支出要么用当前税收融资，要么借钱融资，而借来的钱无非是未来的税收，它对经济表现的影响和当前税收无甚区别。

我们可以把这一原理用于美国不可持续的财政赤字。众所周知，消除这一赤字要么通过减支，要么通过增税。

传统观点认为合理、平衡的方法将兼顾两者。但是，正如弗里德曼所指出的，这两个方法是南辕北辙的。减支意味着政府变小。增税意味着政府变大。因此，偏好小政府者（比如某些共和党）希望完全通过减支来消除赤字；而偏好大政府者（比如总统奥巴马和大部分民主党）希望完全通过增税来消除赤字。

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0 Comments on this paragraph, 15 in all 15 Comments on this article

Stefan S Jan 29, 2013

The answer is quite simple. We need to raise our tax revenues to cover our spending. Those revenues can be found "where the money is": from the wealthy, who have hardly been taxed less while enjoying such wealth, and from the corporations, who have hardly been taxed less while enjoying such profits. A good society--one affording decent wages, fairness, and social justice-- may never be "better for the economy" according to Prof. Barro's lights. Barro fails to account for the ways that effective government promotes the growth of a good life.
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Ayse Tezcan Jan 28, 2013

I believe the Miltonians live in a deeper dreamland than the Keynesians... since we can never show the counterfactual data, each side will keep arguing the causal pathways to demise resulted from activities of the opposing economic viewpoint. And please don't give examples of short-term policy applications; most are laden with uncontrolled confounding. At the end, everyone will subscribe to the economic view that fits one's own perceptions of the world.
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Ben Leet Jan 26, 2013

Federal debt reached a peak in 1946 exceeding 120% of GDP after extensive borrowing. Did this negatively impact economic performance? Between 1949 - 1979 family income grew averaging 2.2% to 2.5% per year among all income groups, all five income quintiles. Between 1979 - 2007 it averaged, per lower to upper quintiles, 0.0%, 0.4%, 0.6%, 0.9%, and 1.5%. The debt/GDP level decreased to around during the 1949-1979 period while marginal tax levels at the top exceeded 70%. This essay begins with an error. I found it unconvincing.
- jack lasersohn Jan 28, 2013
  
  Those who make this point always fail to mention that household and business debt was extremely low in 1946, so that the total debt to gdp ratio was only about 140%. Since households must ultimately service all debt, not just fed debt, total debt is what matters. Over the next 60 years total debt went to nearly 250% of GDP as households and businesses leveraged up like crazy(as the new generation forgot the lessons of the Great Depression). There is no question that at least some of the growth during that period was due to this excess leveraging and that is gone forever. For example, the trend of ever increasing house size was almost certainly a case of debt driven excess demand. So the fact that high federal debt was manageable in 1946 is largely irrelevant given the much higher level of overall leverage in the economy today. We are in for a long period of deleveraging and will probably lose at least 1% per year of GDP growth as a result. More federal debt will increase the tendency for households to deleverage and cut back, only making the problem worse, in the long run.
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Jose araujo Jan 24, 2013

Professor, you enter this discussion with a clear dogma smaller government is a good idea, large government is a bad idea, and under this dogma your argument is reasonable.

The question is why the dogma, why the prejudice against government, you are a scientist, a scholar so you must have learned that you have to reject this kind of thinking.

One thing we know, and its not a dogma, its empirically verified, is that government is more efficient producing some goods then private initiative. We also know why government is more efficient and we know what kinds of goods they are.

If with the development of countries the demand of this goods increase (we also know that) then for sake of efficiency government should increase, not decrease.

You see, if you eliminate your dogma and realize governments not only have to govern (on the strict sense) but also to produce public/social goods you come to the conclusion that government going bigger isn't necessarily a problem , the problem is government producing goods we don't want.

So since our demand for some social goods increase (things like security, health, education) has we have more money, government should grow this areas since its the more efficient way produce this goods.
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Siddhartha Gadgil Jan 24, 2013

By calling "to collect a given amount of revenue (corresponding in the long run to the government’s spending) in a way that causes as little distortion as possible to the overall economy" a "general principle" the author has tried to hide the fact that he has not even slightly justified it. And half the article builds on this.
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Ken Presting Jan 22, 2013

"Smaller government" and "spending cuts" are only the latest euphemisms for privatization - converting non-profit public services (often administered with the utmost efficiency) into for-profit enterprises with a captive market. Medicare pays out a higher percentage of what it collects as benefits to clients than any other insurance operation in the country. As consumers, there is no way our competitive position could improve over the monopsony power of a single-payer plan. Any competent economist sees through Mr. Barro's argument without a second thought.

For those of us who cherish public discussion, the true crisis in American political life is the incursion of paid propagandists into academic life and public debate. The Hoover Institution is emblematic of this. An unbiased department can support itself with grants and students, and will typically have a variety of views among the faculty (um, like Harvard). But when corporate donations dominate the endowment or the budget, corporate interests alone will be advanced.

No concept is more fundamental to American politics than that our government is us. Those who advocate "smaller government" are forgetting both their Hobbes and their Jefferson. Unless the sovereign has a monopoly on the means of coercion, petty domestic princes who are "too big to fail" will privatize their profits while socializing their risk.

Government spending is not some external authority making our purchasing decisions for us. It is we ourselves, setting a purchasing strategy together and combining our purchasing power.

Now, it may be argued that Congress is not truly representative and that their decision are corrupt. I'd agree, but we should discuss that on the other side of this blog.
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Procyon Mukherjee Jan 22, 2013

Spending cuts versus taxation and the reference to OECD countries is fine, but the question is if we take health care for example, which is a sector that contributes to 17% of U.S. GDP, every % cut would take hundreds of thousands of jobs away. This can be counter-balanced by a far-reaching social program that reduces wastes from the system on one hand and increases optimization of resources on the other with the overall focus on increasing the awareness on health, not on wasteful consumption that leads to an almost deep rooted dependence on 'advertized' medicine that does precious little to health. But do we have patience for such a program to take root that would take decades of restructuring and could actually impact those who benefit from wastes that the current system generates?

Outside of health care, we have education and infrastructure, where we get into different problems of allocation and mismatch and quality of spending rather than the quantum which takes the shine off the intended and unintended consequences.
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Pingfan Hong Jan 22, 2013

The size of the government in an economy is more a political issue than a economic one, a result of vote in a democratic society, where the objective function of the voters is not to maximize the economic efficiency of the country. The debate on smaller government versus bigger government will never reach a conclusion. What the economists should do is to take the given size of the government determined by politics as the condition for optimization of resources.
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Andrew N Mason Jan 21, 2013

Smaller government is better on the long run, but the rate at which you make it smaller matters
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Francisco Estudillo Jan 21, 2013

"...Keynesian models that always predict that GDP expands when the government gets larger..."

It must be considered when there is a recession.
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Carol Maczinsky Jan 21, 2013

The US could sent a Nimitz class air carrier to Europe and turn it into a war keynesianism museum. The operating costs of these navy vessels are insane.

Or leave some bombs and helicopters and so forth in the Mali desert. US military capabilities are overblown. It's too expensive and inefficient.
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Andres Castillo Jan 21, 2013

And what about the lessons from Europe. Are those not valid?
- Jose araujo Jan 24, 2013
  
  Europe's problem is the Euro not the government sizes.
  
  If you take closer look at Europe they both validate and deny Barro's points of view, but looking closer...
  
  Scandinavia clearly tells us that a bigger government with high taxes and a strong production of social goods (like education, security, health and social security) is the way to go.
  
  Southern Europe on the opposite tells us that bigger governments are bad, but governments here act in favor of corporations, they are big because they have to buy goods that are produced by the ones that support. Big government with high inequality.
  
  In the end its not the size that matters its what government does.
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- Matthew Cowan Jan 22, 2013
  
  I believe the lessons from Euorpe tend to vindicate Mr. Barro's article, not discredit it. Several economies, including Greece and Italy, were able to structure financial products that added more debt and spending than was officially shown in reports to the EU. These debts were the equivalent of 'off-balance sheet' borrowing for these nations.
  
  This enabled Greece and others to add debt while still meeting their EU targets for budget deficits. This, in turn, increased the size of government and its ability to spend during the boom years with the unfortunate consequence of leaving these countries heavily indebted when the crisis of 2008 hit in full force.
  
  Greece also had a higher tax on labor than many other European countries. Greeks tended to retire earlier than their European counterparts and pension expense was forecast to increase much faster than other nations.
  
  Liberals tend to look at the significant drop in government spending and the simultaneous drop in GDP and blame the latter on the former, but the situation in Greece is more complicated than that. Cuts in government spending are part of the decrease in GDP, but the fall is much more complicated. The social fabric of Greece is being tested by its unsustainable debt boom and entitlement commitments.
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