A very good point from the Democracy in America blog at the Economist:
My feeling is that what we’re seeing here are inherent political weaknesses in the anti-austerity message itself. Asking voters to embrace that message means asking them to approve of the government borrowing money which will add to their repayment burden as taxpayers, and then spend that money on other people. … A neo-Keynesian will say that these are the unsentimental measures needed to restore economic health: you get the most creditworthy entities, the national governments at the core of the dollar and the euro, to leverage up while everybody else in the economy deleverages, so that not everyone is ruinously trying to deleverage at the same time. But citizens do not ordinarily understand things this way; to most people, more debt is more debt, regardless of whether it’s held by government or the private sector, and it scares them.
This ties in with the point I made yesterday (that the public tends to worry a lot about ‘debt’ in the abstract as a stand-in for general concerns about the economy). It is intrinsically difficult to sell people on the value of Keynesian stimulus because it doesn’t sound right. If you’re talking about personal finances, being in debt is pretty bad.
However, I’m not convinced this is really so out of line with the ‘normal’ lives of people.
Let’s say you are unemployed. But you’ve got a really great job offer. The only problem is, it’s about 10 miles away from where you live. Rather than just giving up on the job, it might be perfectly reasonable to borrow some money and buy a car. After all, getting steady employment is far more important to your long term economic situation than the precise amount of money that you owe. With the job, you will have the money to PAY OFF the debt. And you’ll have a job.
What’s more, in this hypothetical, let’s imagine that you somehow have a top-notch credit score and can borrow the money for the car at close to zero interest. Your decision just got even easier!
Anyone who borrows money to go to school is making the same investment decision. Anyone with a mortgage. They’re all in debt, too. The only difference is that the US government is a way better credit risk and so can borrow at way cheaper rates.
Now, if you think the government is fundamentally untrustworthy, you’ll be inclined to see a different analogy: the person who maxes out a bunch of credit cards to pay off other credit cards. That is: someone who is running ever-escalating cycles of debt. The problem with that picture is that there’s plenty of evidence that the government can cut its debt when the time is well-suited to it. See: the 1990s.
The point is not that debt is great. There are genuine long-term problems with consistently running deficits. But they’re not really all terrible, particularly when the basic problem with our economy is a lack of movement. I think, with some real effort devoted to drawing these connections, you could start to get people to see that.