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Deconstructing Public Debt: Who Owes What to Whom?

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  • Richard E. Wagner

    (George Mason University)

Abstract

This essay memorializes Giuseppe Eusepi’s contribution to political economy by refining the theme he and I sketched 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.

Suggested Citation

  • Richard E. Wagner, 2023. "Deconstructing Public Debt: Who Owes What to Whom?," Homo Oeconomicus: Journal of Behavioral and Institutional Economics, Springer, vol. 40(1), pages 5-17, December.
    • Handle: RePEc:spr:homoec:v:40:y:2023:i:1:d:10.1007_s41412-022-00133-8
    DOI: 10.1007/s41412-022-00133-8
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    References listed on IDEAS

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    1. Barro, Robert J, 1974. "Are Government Bonds Net Wealth?," Journal of Political Economy, University of Chicago Press, vol. 82(6), pages 1095-1117, Nov.-Dec..
    2. Giuseppe Eusepi & Richard E. Wagner, 2013. "Tax Prices in a Democratic Polity: The Continuing Relevance of Antonio de Viti de Marco," History of Political Economy, Duke University Press, vol. 45(1), pages 99-121, Spring.
    3. Barro, Robert J, 1979. "On the Determination of the Public Debt," Journal of Political Economy, University of Chicago Press, vol. 87(5), pages 940-971, October.
    4. Seater, John J, 1993. "Ricardian Equivalence," Journal of Economic Literature, American Economic Association, vol. 31(1), pages 142-190, March.
    5. Giuseppe Eusepi & Richard Wagner, 2012. "Indebted state versus intermediary state: who owes what to whom?," Constitutional Political Economy, Springer, vol. 23(3), pages 199-212, September.
    6. Jurgen Backhaus, 1978. "Pareto on public choice," Public Choice, Springer, vol. 33(1), pages 5-17, March.
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