Deconstructing Public Debt: Who Owes What to Whom?

Abstract

This essay memorializes Giuseppe Eusepi contribution to political economy by refining the theme he and I set forth in 2017 in Public Debt: An Illusion of Democratic Political Economy. There, we claimed that it was illusory to describe democratic governments as being indebted. We did not advance our claim flippantly or lightly. To the contrary, we advanced it in full seriousness. In this essay, I dig beneath the surface of national indebtedness to examine just who owes what to whom when people refer to public debt. When this is done, public debt is seen to resemble a shell game in that repeated references to “our” debt camouflage the web of fiscal advantage and handicap that public borrowing spreads within a society. It is this pattern of advantages and handicaps more than the aggregate fact of indebtedness that is surely the most significant and most neglected feature of public debt.