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You, me and Mary are in the middle of campaigning for our democracy’s budget for next year. I am campaigning for the Balanced Budget Bill, which requires that our budget be balanced—and all three of us, wholeheartedly and without reservations, agree. So the Balanced Budget Bill sails through. You are campaigning for the Lower Taxes Bill, which you obviously favor, and to which I also wholeheartedly agree. Therefore, the Lower Taxes Bill has a majority—and it too passes. However, Mary is campaigning for the More Government Services Bill, to which which I also wholeheartedly agree, creating another majority—and it too passes.
You may say to me, “But your position is contradictory!” But I reply, “Certainly not!” In fact, I did my civic duty: I listened to all the arguments, and I voted for all the bills. I think we should cut taxes—so when it came to a vote, I voted in favor of the Lower Taxes Bill, which passed. But I also want more government services—so when it came to a vote, I voted in favor of Mary’s More Government Service Bill, which also passed. And all the while, I’m still in favor of my law, the Balanced Budget Bill, for which I voted.
Thus, as a group, we have an incoherent outcome: The majority of the group believes taxes should be cut—and at the same time, the majority of the group thinks the government should deliver more services to the people. All of the members of the group individually do not want a deficit, but as a group their incoherence leads to a deficit.This is the democratic fiscal incoherence, a situation unique to democracies.
Once the democratic regime fails to resolve its fiscal incoherence one year and instead covers the shortfall with debt, the democracy enters a debt spiral: The cost of resolving the fiscal incoherence of the electorate is double what it was last year (last year’s cost plus this year’s cost), while the cost of borrowing in order to paper over the fiscal incoherence has likely remained the same, or risen only slight. Therefore, the cost of borrowing the second year is half what it was the first year. And the third year? Assuming the costs of debt haven’t risen significantly, the debt is cheaper still on the third year, when compared to the costs of the accumulating, unresolved fiscal incoherence of the previous years.
This is how every year, the costs of additional debt falls in relation to the cost of resolving the accumulated fiscal incoherence. And this is how it will continue in a democracy, as its debt spirals. So long as the cost of issuing debt remains lower than the political, financial, personal, social, and emotional costs of resolving the democratic fiscal incoherence, then the deficit will continue (or expand), and the total fiscal debt will grow—because each of the majorities will want more of what it got with each passing year. This is the problem of unresolved fiscal incoherence: Each majority in a democratic regime becomes accustomed to getting its way, and not reaching a compromise or accomodation with the other majorities that would be necessary, were the fiscal incoherence of the democratic process forced to be resolved.
Originally posted by TDawgRex
reply to post by silent thunder
I have reached the conclusion that there will be no SS check for me and will probably work until the day I die. Hmmmm...That looks odd as I am currently unemployed. But my own retirement makes ends meet for now.
But I do expect it to ring true nonetheless.