eric's Writing Portfolio

Happiness in Symphonic Sculpture, Hakone Open-Air Art Museum, Japan, Taken 2024.

Introduction

Democracy, as we know it, is not truly democratic. A group of people are heavily impacted by our decisions and yet have no power in our democratic institutions: future people. 

Those yet to be born are at the mercy of our decisions on AI regulation, climate change, and resource usage, and so we, current-day humanity, must consider their interests. This is the philosophy of Longtermism, which advocates for valuing future people just as much as present ones (Greaves, Askill 2). However, most longtermist calls for institutional reform have focused on giving future generations representation in legislative affairs, and little attention has been paid to fiscal policy’s effect on future generations.

As such, this essay will provide a longtermist perspective on government finances, and specifically debt. I argue that public debt is a form of involuntary theft from future generations and that elected officials should not be entrusted with controlling government debt because they have a fundamental conflict of interest. I then propose that governments put their debt policy under the control of an independent board of experts who represent the interests of the future, which I call the “debt council.” Such a plan not only eliminates short-sighted fiscal policy but also turns debt into the engine of long-termist policy by allowing future people to fund actions that benefit them. 

Public Debt and Future Generations

For most forms of debt, repayment is under the sole responsibility of the borrower, so they alone face the consequences of default, which can include the repossession of assets or bankruptcy. However, public debt differs from other forms of debt because “the persons who, as agents for the state, make fiscal decisions do not face obligations to repay its creditors”  (Buchanon). Instead, the responsibility of debt repayment is forced upon the future taxpayers of a nation who inherit the debt of previous generations in what some have called “generational theft” (Wall Street Journal). 

Siphoning money from those yet to be born and spending it in the present is justifiable if the borrowed money is invested into increasing long-term productivity through infrastructure, research and development, or combatting pollution (Monteil 261). Future governments would then have additional assets to not only repay the debt and interest but also improve their citizens’ standards of living. Economists call such debt “good debt,” as it creates capital for necessary projects that benefit the present through employment and stimulus as well as the future through higher productivity (Hakura).

However, elections incentivize policymakers to spend borrowed money on “bad debt,” which only increases short-term consumption through stimulus, welfare, or cutting taxes rather than increasing long-term economic potential. As such, public debt has almost universally grown faster than productivity; the global debt-to-GDP ratio has tripled between 1970 and 2018 (IMF). Thus, the current system of elected officials deciding fiscal policy incentives short-termist thinking, harming future generations’ economic prospects for temporary growth.

It can be argued that a government should never allow its citizens to suffer by cutting funding to welfare or pensions, even if it raises debt. However, the costs of interest payments and redemption will increase over time, so the overall long-term moral cost of taking out unproductive debt is often greater than the moral good obtained in the present. For example, massive spending on welfare programs by the Japanese government in the past means it spends four times more money repaying debt in 2023 than it took out in 1990, showing that the future financial burden of “bad” debt is greater than the funds obtained in the present (Japanese MoF 8). This massive debt burden has contributed significantly to Japanese economic stagnation as its current government must reduce spending on servicing present citizens or issue more bonds to cover the deficit. 

Often, term limits and electoral politics compel governments to opt for the latter, leading to unsustainable debt accumulation, default, and economic collapse. In 1980s Latin America, for instance, high domestic consumption and poverty reduction programs, which were propped up by populist debt-funded government spending, led to default as investor confidence dropped and bondholders demanded higher interest rates. During the following “Lost Decade,” poverty rose immensely, and lower confidence contributed to later economic crises in 1997 and 2008 (Joselyn). The Latin American debt crisis shows that even if taking out debt for the well-being of a government’s present citizens seems noble, the sudden collapse and stagnation of an economy in the long term leads to more harm than good. As such, to create a longtermist political system that places equal moral value on future citizens as present ones, the current short-termist system of public debt must be overhauled and reformed. 

The Debt Council: Bringing Accountability to Public Finances

To bring longtermism to government finances, I propose the creation of a new future-oriented body: the Debt Council. Debt Councils wield sole authority over the issuing of bonds, spending of borrowed money, and the timetable for repayment. 

Because public debt is, in essence, an involuntary tax on the future, debt councils aim to represent the interests of the future and give them a say in policies that affect them. As such, council members would be experts motivated retroactively through financial incentives. Future debt councils determine pensions and benefits for past members, thus ensuring what philosopher Tyler John calls “iterative accountability” (John 8). Council members represent diverse backgrounds, encompassing both academics and skilled professionals from various industries. Each council would determine the composition of the next ones in terms of backgrounds. However, the selection of specific council members would be carried out through sortition or random selection to prevent nepotism or corruption, as corporations or previous council members cannot predict who is on the next council. The specifics of the selection process may vary depending on the circumstances. However, like other proposals for intergenerational representation in government, the overarching goal is to establish a highly qualified yet diverse council insulated from political business cycles, corruption, and conflicts of interest (John, McAskill 10).

The main job of a debt council would be to maximize the net social benefit from debt for the future, ensuring that all debt is “good debt.” To accomplish this, they would conduct Benefit-Cost Analyses (BCAs) on all policies under their jurisdiction. BCAs, which many governments already use to evaluate infrastructure grant proposals, estimate the economic gain of a project during its lifetime from improved efficiency, standard of living, or health and the projected cost to find the “net change to societal welfare” (US DoT).

Debt as a Funder of Long-Termist Policy

By optimizing the timetable for repayment, the Debt Council fills in a gap in many traditional approaches to promoting intergenerational equity in government: the question of funding. Previous proposals of instituting future assemblies do not specify the source of capital for expensive future-centric ventures, such as combating climate change or infrastructure. The few examples of successful longtermist decision-making have raised taxes on present citizens, such as the Japanese town of Yahaba, which raised its taxes by 6% to future-proof water infrastructure (Hara 13). However, forcing current citizens to pay for projects that do not benefit them is unfair and likely unpopular based on the negative association between taxes and government approval. For true intergenerational equity, the present should not be solely responsible for providing for the future.

My proposal of a debt council instead utilizes debt to transfer wealth from the future to the present, enabling future-oriented projects to be funded by the future itself. Each generation would pay for policies and investments that benefit them. This is a more sustainable framework for long-termism as it is a more mutually beneficial transaction between the present and future rather than a purely altruistic endeavor. 

To accomplish this goal, Debt Councils conduct distributional benefit analyses on each individual year of the future, which would inform the timetable of repayment. They would distribute project costs among future years generally proportional to their economic benefit. For example, if a new infrastructure project will result in a $4 billion GDP boost in 2050 and a $5 billion boost in 2070, 2070 should carry a 25% larger debt burden than 2050. 

Because each generation pays a small percentage of their economic gain from a project, the cost of a project gets spread out over time, and every generation benefits, whether from the increased employment during the construction or the improved productivity afterward. It minimizes the effect of debt repayment on future societies while maximizing the gain they get.

 In practice, this means that debt council bonds would have terms based on its timetable for debt repayment. Because bondholders would probably be unwilling to buy long-term bonds that get repaid after their death, additional bonds would be issued to repay old debtholders. However, the final repayment would still occur based on the time frame decided by the debt council. 

However, for most projects, the benefits, and in turn, repayment costs, carry into the indefinite future. Especially for issues such as climate change, which have a continuous effect on the global economy, calculating the effect of a project like a Green New Deal for every year until human extinction is an impossible task. As such, it would be difficult to guarantee that debt would be repaid by citizens thousands of years in the future. 

Therefore, an important role of the debt council is also to balance fairness with feasibility so that future generations would be able to pay their fair share. Councils can refer to confidence levels of the CBA data and reduce the required payment for years further in the future, which would have lower certainty. However, much of the scope and timeframe of the repayment process would be subjective and up to deliberation by the council itself. 

Fiscal Councils: An Existing Precedent

While no government has ever instituted a system similar to the debt council I am proposing, fiscal councils that provide expert recommendations for government finances are becoming increasingly common, especially after the 2008 recession. For instance, the Congressional Budget Office of the United States provides information and analysis of government finances for the US Congress. While it has seen numerous controversies, experts agree that, despite increasing partisanship in Congress, the office has remained nonpartisan and accurate in its numbers and observations (Clark Center Economic Experts Panel). While debt councils hold significantly more power, fiscal councils show that it is possible for a body that helps manage government finances to be unbiased and competent. 

Conclusion

Public debt is involuntary theft from future generations, and elected governments only accountable to present voters cannot wield their power. However, by instituting a debt council to issue, spend, and repay responsibly, we can turn debt from a shackle on future generations into a way for them to fund longtermist projects fairly. 

Works-Cited:

Greeves, Hilary, Askill, William. “The Case for Strong Longtermism” Global Priorities Institute, June 2021, https://globalprioritiesinstitute.org/wp-content/uploads/Tyler-M-John-and-William-MacAskill_Longtermist-institutional-reform.pdf. Accessed 16 Oct 2023

Buchanan, James. “The Deficit and Our Obligation to Future Generations.” Imprimis, 12 Apr. 2017, imprimis.hillsdale.edu/the-deficit-and-our-obligation-to-future-generations/. 

Gothard, David. “Canada, Druckenmiller and Warsh: Generational Theft Needs to Be Arrested.” The Wall Street Journal, Dow Jones & Company, 17 Feb. 2013, http://www.wsj.com/articles/SB10001424127887323485704578257753243530078. 

Montiel, Peter J. “Public Debt Management and Macroeconomic Stability: An Overview.” The World Bank Research Observer, vol. 20, no. 2, 2005, pp. 259–81. JSTOR, http://www.jstor.org/stable/41261418. Accessed 17 Oct. 2023.

Hakura, Dalia. “Back to Basics: What Is Debt Sustainability? – IMF F&D.” IMF, 1 Sept. 2020, http://www.imf.org/en/Publications/fandd/issues/2020/09/what-is-debt-sustainability-basics. 

Gaspar, Vitor, et al. “Global Debt Is Returning to Its Rising Trend.” IMF, 13 Sept. 2023, http://www.imf.org/en/Blogs/Articles/2023/09/13/global-debt-is-returning-to-its-rising-trend#:~:text=Global%20public%20debt%20tripled%20since,span%20between%201960%20and%202022. 

“What Is a Benefit-Cost Analysis (BCA)?” U.S. Department of Transportation, http://www.transportation.gov/grants/dot-navigator/what-is-a-benefit-cost-analysis#:~:text=A%20benefit%2Dcost%20analysis%20(BCA)%20is%20a%20systematic%20process,well%20as%20infrastructure%20project%20evaluation. Accessed 17 Oct. 2023. 

Japanese Ministry of Finance, “Japanese Public Finance Fact Sheet.” April, 2022, https://www.mof.go.jp/english/policy/budget/budget/fy2022/03.pdf

Sims, Jocelyn. “Latin American Debt Crisis of the 1980s.” Federal Reserve History, http://www.federalreservehistory.org/essays/latin-american-debt-crisis. Accessed 17 Oct. 2023. 

John, Tyler. “Securing Political Accountability to Future Generations with Retrospective Accountability” https://philpapers.org/rec/JOHSPA-12

Hara, Keishiro. “Reconciling intergenerational conflicts with imaginary future generations – Evidence from a participatory deliberation practice in a municipality in Japan -” http://www.souken.kochi-tech.ac.jp/seido/wp/SDES-2017-19.pdf Accessed 14 Oct. 2023

“The CBO”. Initiative on Global Markets (IGM), University of Chicago Booth School of Business. March 21, 2017.