Who pays?

The politician 1775 engraving by a J.K Sherwin after a 1730s sketch by Hogarth

“A politician should (as I have read)
Be furnish’d in the first place with a head…”

With the recent elections in Europe and the upcoming G8 summit there is an outbreak of talk of a choice between austerity and growth. By a choice of growth, most mean that governments should become an engine of economic stimulation via public spending.

Politicians in democracies should always do what is popular, that’s what makes it a democracy, but a proper democracy requires an informed electorate. This puts an extraordinary burden on politicians and journalists not just to be impartial, but to know what they are talking about.

When I was first studying macro economics, my favourite lecturer gave us two facts* which he believed all prospective politicians and journalists should demonstrate an understanding of before taking up their roles. They are encapsulated in two questions which electors / readers should ask :-

1. Who does a borrower borrow from?  and

2. Who pays taxes?

The answers are, of course, via convoluted mechanisms :-

1. the borrower’s future self, and

2. people (Mostly those in private sector employment or with personal wealth).

We should all be wary of being bought with our own money.

* I say facts but they are, of course, assertions. If you disagree by all means say so, and why, in a comment.

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