to the government now in order to receivena share of tax loot in the future. This isnthe opposite of a free market, or a genuinelynvoluntary transaction. Both partiesnare immorally contracting to participatenin the violation of the propertynrights of citizens in the future. Both parties,ntherefore, are making agreementsnabout other people’s property, and bothndeserve the back of our hand. The publicncredit transaction is not a genuinencontract that need be considered sacrosanct,nany more than robbers parceling outntheir shares of loot in advance should bentreated as some sort of sanctified contract.nAny melding of public debt into a privatentransaction must rest on the commonnbut absurd notion that taxation is reallyn”voluntary,” and that whenever the governmentndoes anything, “we” are willinglyndoing it. This convenient mythnwas wittily and trenchantly disposed ofnby the great economist Joseph Schumpeter:n”The theory which construes taxesnon the analogy of club dues or of thenpurchases of, say, a doctor only proves hownfar removed this part of the social sciencesnis from scientific habits of mind.”nMorality and economic utility generallyngo hand in hand. Contrary tonAlexander Hamilton, who spoke for ansmall but powerful clique of New Yorknand Philadelphia public creditors, thennational debt is not a “national blessing.”nThe annual government deficit, plus thenannual interest payment that keeps risingnas the total debt accumulates, increasinglynchannels scarce and precious private savingsninto wasteful government boondoggles,nwhich “crowd out” productive investments.nEstablishment economists,nincluding Reaganomists, cleverly fudgenthe issue by arbitrarily labeling virtuallynall govemment spending as “investments,”nmaking it sound as if everything is finenand dandy because savings are being productivelyn”invested.” In reality, however,ngovemment spending only qualifies asn”investment” in an Orwellian sense; governmentnactually spends on behalf ofnthe “consumer goods” and desires of bureaucrats,npoliticians, and their dependentnclient groups. Government spending,ntherefore, rather than being “investment,”nis consumer spending of a peculiarlynwasteful and unproductive sort, since itnis indulged not by producers but by a parasiticnclass that is living off, and increasinglynweakening, the productive privatensector. Thus, we see that statisticsnare not in the least “scientific” or “valuefree”;nhow data are classified—whether,nfor example, government spending isn”consumption” or “investment”—dependsnupon the political philosophy and insightsnof the classifier.nDeficits and a mounting debt, therefore,nare a growing and intolerable burdennon the society and economy, both becausenthey raise the tax burden and increasinglyndrain resources from the productive to thenparasitic, counterproductive, “public” sector.nMoreover, whenever deficits are financednby expanding’bank credit—innother words, by creating new money—nmatters become still worse, since creditninflation creates permanent and risingnprice inflation as well as waves of boombustn”business cycles.”nIt is for all these reasons that the Jeffersoniansnand Jacksonians (who, contrarynto the myths of historians, were extraordinarilynknowledgeable in economic andnmonetary theory) hated and reviled thenpublic debt. Indeed, the national debtnwas paid off twice in American history,nthe first time by Thomas Jefferson and thensecond, and undoubtedly the last time,nby Andrew Jackson.nUnfortunately, paying off a nationalndebt that will soon reach $4 trillion wouldnquickly bankrupt the entire country.nThink about the consequences of imposingnnew taxes of $4 trillion in the UnitednStates next year! Another way, and almostnas devastating, a way to pay off thenpublic debt would be to print $4 trillionnof new money—either in paper dollars ornby creating new bank credit. This methodnwould be extraordinarily inflationary, andnprices would quickly skyrocket, mining allngroups whose earnings did not increasento the same extent, and destroying the valuenof the dollar. But in essence this isnwhat happens in countries that hyper-inflate,nas Germany did in 1923, and inncountless countries since, particularly thenThird World. If a country inflates the currencynto pay off its debt, prices will rise sonthat the dollars or marks or pesos the creditornreceives are worth a lot less than thendollars or pesos they originally lent out.nWhen an American purchased a 10,000nmark German bond in I9I4, it was worthnseveral thousand dollars; those 10,000nmarks by late 1923 would not have beennworth more than a stick of bubble gum.nInflation, then, is an underhandednand terribly destructive way of indirectlynrepudiating the public debt;ndestructive because it ruins the currencynunit, which individuals and businessesndepend upon for calculating all theirneconomic decisions.nI propose, then, a seemingly drastic butnactually far less destructive way of payingnoff the public debt at a single blow: outrightndebt repudiation. Consider this question:nwhy should the poor, battered citizensnof Russia or Poland or the othernex-Communist countries be bound by thendebts contracted by their former Communistnmasters? In the Communist situation,nthe injustice is clear: that citizensnstruggling for freedom and for a freemarketneconomy should be taxed to paynfor debts contracted by the monstrousnformer ruling class. But this injustice onlyndiffers by degree from “normal” publicndebt. For, conversely, why should thenCommunist government of the SovietnUnion have been bound by debts contractednby the Czarist government theynhated and overthrew? And why shouldnwe, stmggling American citizens of today,nbe bound by debts created by a past rulingnelite who contracted these debts at ournexpense? One of the cogent argumentsnagainst paying blacks “reparations” fornpast slavery is that we, the living, werennot slaveholders. Similarly, we the livingndid not contract for either the past or thenGOLDWATER INSTITUTE, Phoenix, Arizona,nseeks executive director. GI does public policynanalysis with market orientation. 25-30K salary.nSend resume to Roy Miller, Goldwater Institute,nValley Bank Center-Concourse, 201 N. CentralnAve., Phoenix, AZ 85004.nnnJUNE 1992/51n