“A democracy is always temporary in nature; it simply cannot exist as a permanent form of government. A democracy will continue to exist up until the time that voters discover that they can vote themselves generous gifts from the public treasury. From that moment on, the majority always votes for the candidates who promise the most benefits from the public treasury, with the result that every democracy will finally collapse due to loose fiscal policy, which is always followed by a dictatorship.” This is a quote attributed to Alexander Fraser Tytler an 18th century critic of democracy.
As of January 2024, US national debt is currently $34 trillion / $264,090 per taxpayer. No administration in almost a century, Republican or Democrat, has been able to decrease spending. The last President to oversee a reduction in the national debt was Calvin Coolidge who left office in 1929.
QUESTION: Do you believe that democracy in the United States of America is in danger of collapsing due to loose fiscal policy? Please explain why or why not. If your answer is yes, is there a democratic solution to this problem and what would it be?
Jacob: Conservative
1st Response
From a historical perspective, money matters have regularly been tipping points in constitutional republics. Rome remains example par excellence, as the decades preceding Caesar were times of staggering inflation and other pecuniary sins. Nonetheless, I do not think that American democracy itself is in danger because of fiscal policy. Rather, I see the current fiscal policy in all of its tentacles as the fullest realization of American democracy. As the American republic has progressed through history, it has become progressively more democratic. Regardless of one’s political evaluation of the aspects of this democratization, it has given the majority more and more power. I think, because of the democratic tendency to empty the “public treasury” – AARP’s continual promise to defend Social Security comes to mind – there is a far greater threat to American republicanism than American democracy. The latter threatens the former, and loose fiscal policy is that efficient means of death.
Rob Reply
Before we proceed I want to make sure we are using the same definitions. In the first part of your answer you state, “I do not think that American democracy itself is in danger because of fiscal policy.” In the second part of your answer you seem to be trying to make a distinction between a republic and a pure democracy and then you state that “loose fiscal policy is that efficient means of death.”
When I say democracy in the USA, I mean our current form of government, where we elect our leaders, we have separate branches of government with checks and balances, and we have a constitution that our leaders are supposed to be bound by.
So to restate the question, Do you believe our current form of government in the United States of America is in danger of collapsing due to loose fiscal policy?
Jacob 2nd Response
The American government is a historical behemoth in terms of what it has weathered: revolution and the birthing pains of adopting a Constitution, civil strife and the Civil War, and the mess that was the 20th Century. Certainly, there have been times when many thought the United States government too fragile to endure, and I am sure that many now think that again due to the growing financial weaknesses present in our system. I share these types of concerns, but I do not share the degree of concern.
One of the surprising things about American history is how well the government adapts to crisis – it may not always be a successful adaptation, but it is a speedy one for the government. Wartime adaptations may come to mind, but the quantitative easing by the federal reserve after 2008 is also such an example, if not more effete and vilifiable. Nonetheless, because the People are sovereign in America, effective change most efficaciously comes from them.
In considering the current culture, viz., the younger generations, all too apathetic and insipid to much do anything beyond what the government puts forth – the youth revolutions of the 60s are from a bygone age. If functional change is to arise, it would necessarily come from a people that is too self-encumbered to effectuate any change. Financial collapse is imminent, given enough time, but while loose fiscal policy may indeed cripple the United States as a world player, I would be totally shocked to discover that a severe financial collapse recapitulated the American Revolution. In my estimation, loose fiscal policy will not cause the collapse of the current system, but instead allow an external threat success it otherwise would never achieve.
Rob Interview with Jacob
Jacob Final Answer
“Do you believe that democracy in the United States of America is in danger of collapsing due to loose fiscal policy?”
Most likely no. I can’t think of another example of a nation collapsing due to loose fiscal policy. America has weathered far worse crises then the current national debt. All forms of government are temporary. Democracy is no different. The current amount of debt is a problem but not a fatal problem. Without a virtous citizenry, a republic cannot survive any serious crisis. A nation as powerful as the US could pursue other options in the event of a serious debt crisis such as selectively defaulting debts that are held by adversarial nations with the implied use of force by the American military should they try to collect. I am neither hopeful nor pessimistic about the future. Nations rise and fall just as people do. If I could pick anyone to answer this question, it would be my political science professor, Sam Stanton.
Scale of Confidence in Answer: 10/10
Amy: Libertarian
1st Response
Tytler’s quote is striking and ominous in light of America’s current debt. I do believe democracy is in danger of collapse, but when exactly is not something I can predict. Though the US government has never missed a bond payment, people and foreign governments will become less eager to buy bonds if there’s a general distrust about the economic future, and the US government will have to offer higher interest rates to sell more bonds. The Fed can create more money as needed, but as the money supply is inflated, this exacerbates the problem because 1. buyers will demand higher interest rates, rates that have to exceed the expected rate of inflation and 2. inflation has many other damaging effects, such as disincentivizing saving and investing which are the requirements for healthy economic growth. The eventual result is hyperinflation, which is arguably likely followed by the rise of a dictatorship. (See Weimar Germany, for example.)
Tytler is exactly correct about voter behavior. Most voters are ignorant, and rationally so; there’s only a miniscule benefit to becoming educated since any one vote is inconsequential in an election, but the opportunity cost is large. So, people will stay ignorant and listen to politicians’ promises of basically “generous gifts from the public treasury,” unaware or uncaring about the consequences.
Considering the rational ignorance of voters, plus the tendency for people to demand immediate benefits with delayed and dispersed costs, a democratic solution is unlikely at best. To suggest or hope for severe cuts in government spending is unrealistic. But for as long as people and foreign governments are willing to buy bonds, America can stay out of a severe debt crisis. To insure this and help the economy, government officials should focus on decreasing spending, government intervention, and the rate of inflation.
Rob Reply
1. How serious of a problem do you think the current US debt level is? Current US debt to annual GDP is about 120%, even exceeding WWII levels. As a contrast Japan has a current debt to annual gdp ratio of about 263%! I believe they have low single digit inflation as well. I have heard no mention of potential Japanese government collapse.
2. What would constitute a severe debt crisis?
3. How can government officials focus on decreasing spending if they will be voted out and replaced with those who will increase spending?
Amy 2nd Response
1. It’s more serious than many people realize or want to accept; however, I don’t think mass panic would be helpful and neither is it called for (yet). When you look at graphs of national debt to GDP over the decades, it is quite concerning. The good news however is that interest rates have been fairly stable, and from this we can infer that investors still judge that the government has a very low risk of defaulting. Hopefully, this will continue to be the case, and the nation can keep from a more severe debt crisis.
Japan seems to be holding on alright but it’s fairly well-known that their economy has been struggling for decades. Unfortunately, I do not know enough about the Japanese political landscape to comment in an educated way about the risk of government collapse due to a weak economy.
2. It’s hard to say since that there are certainly degrees of crisis. By “severe,” I picture a time marked by hyperinflation as the government’s last resort to pay its debtors. This would be accompanied by mass panic, unemployment rocketing, and hardly any saving and investing.
3. Short answer: They can’t.
Longer answer: …or at least, government officials who prioritize and value decreasing spending are at a huge disadvantage in the game of politics. National debt may be the type of thing that has to get worse — as in, must cause more felt effects by more people — before fiscally conservative officials can actually help it to get better. If, upon noticeable declines in the economy, people realize how urgent and important it is to decrease spending, then officials who care about cutting spending have more of a fighting chance. However, that may not happen until it’s too late to effectively reverse the national debt situation. And even if opinions changed, anyone trying to decrease spending would run into major pushback from those in the sectors affected by proposed cuts — it’s easy to imagine that a certain bureaucrat might support decreasing spending in the theoretical, yet he would still say, “But don’t cut spending in MY area!” and try to reason why his committee/fund/department/etc. deserves to receive government funding.
Rob Interview with Amy
Amy Final Answer
“Do you believe that democracy in the United States of America is in danger of collapsing due to loose fiscal policy?”
Yes, but we are not yet experiencing a severe debt crisis, which would be marked by hyperinflation. Collapse is not imminent. Yes, democracy is a temporary form of government, and likely to dissolve into dictatorship. I do not think there is a realistic democratic solution to out-of-control government spending. The best we can do is hopefully slow down our descent towards an eventual debt-induced crisis. I am opposed to increasing spending, accelerating the problem, in an effort to reach a solution more quickly. I am pessimistic about the economic fate of this country, but despite that, I still have hope for the future because of my belief in God and his sovereignty. If I could pick one person to answer this question it would be PhD candidate, Tegan Truitt
Scale of Confidence in Answer: 6/10
Max: Republican
1st Response
In short, no, I do not. While having such a high debt is nerve-racking and does make good news headlines, it’s understandable why we have such a high debt. The United States dollar has been the primary global reserve currency for the last 75 years. This has allowed the U.S. to maintain higher levels of debt and reflects the worldwide trust in the country’s financial institutions, economy, and democratic system. Our democracy has pushed us forward in innovation and investment in the future. Having a high debt as we have now is not for worthless things in the government; it actually shows a strong economy. The debt shows that the United States is investing in its future; it’s for future protection, innovative products, and services.
The United States has the largest GDP in the world, which also means it has a large debt. However, the growing economy of the USA suggests that it has the ability to support its debt. While there are many factors that pose a threat to democracy, the national debt, in some ways, demonstrates a strong and innovative country – rather than a democracy collapsing. Democracy can adapt to challenges and self-correct to manage debt, keeping itself alive.
Rob Reply
1. Is there an amount of debt that the US could accumulate where you believe American democracy would be imperiled?
2. What other factors do you believe are a greater threat to democracy than loose fiscal policy?
3. How can our democracy self-correct to manage debt, given its track record of not being able to do so?
Max 2nd Response
1. Yes, there is; as a great percentage of American citizens have debt, there is always a breaking point. When the world does not use the dollar as its primary global reserve, it loses trust in the United States economy, and when the United States loses its global power recognition, we would have to worry about the country falling apart due to debt. The USA losing the dollar as the primary global reserve would make interest borrowing rates go up and make it harder to manage debt. Losing international trust would lose foreign governments’ and investors’ trust, which would lead to fewer investments and capital outflows. The last straw would be the United States losing its global power status; who would want to fight a war over a small debt that needs to be paid with the most powerful military?
Rob Interview with Max
Jacob Final Answer
“Do you believe that democracy in the United States of America is in danger of collapsing due to loose fiscal policy?”
No, the current level of debt is a problem but not an existential threat. It is understandable why we have such a high level of debt since the government is investing in the future of the country; however, the current level of debt is too high. It would be a good idea to try and reduce the debt by reducing nonessential government spending, the government can avoid wasting money on ineffective uses. If and when the debt reaches higher levels, it could be a more serious problem. We should reduce the debt, but not pay it down to zero because having debt for investing in the future of the country is considered “good debt.” We are in little to no danger of our democracy collapsing into dictatorship due to loose fiscal policy. The contemporary United States is vastly different from Germany in the 1930s or Russia in the 1910s. This is mainly due to the availability of instant communication through social media and the freedom to express oneself. Additionally, it has been shown that the dictatorial implementation of communism, fascism, and socialism in a country is disastrous for allocating resources efficiently and would worsen the main problem of loose fiscal policy. I am hopeful about the future of our country. I am dismayed about the spread of misinformation and the government’s efforts to illegitimize a potential rival Presidential candidate. The debt crisis needs to get worse before it gets better. It is not a big problem in the minds of most Americans today. I support worsening the debt to solve it faster, if necessary, for our country. If I could pick one person to answer this question it would be my Econ Professor Caleb Fuller.