Stable, responsible governments — that is, governments that are willing to impose modestly higher taxes when the situation warrants it — have historically been able to live with much higher levels of debt than today’s conventional wisdom would lead you to believe. Britain, in particular, has had debt exceeding 100 percent of G.D.P. for 81 of the last 170 years.
Interesting op-ed from a US newspaper about the wrong-headed thinking that analogises government debt with personal or household debt. My only criticism, as such, is that it doesn’t see that the UK’s Tory government has conned a lot of the voting public into fetishising debt reduction in a similar way, to cloak its doctrinaire aims of privatising the state.
[via Daring Fireball]