Comment by tehabe | Hacker News Reader

Comment by tehabe | Hacker News Reader

Parent Full thread

The problem is, state debt is not like personal or corparate debt. If you cut your spending to pay of a loan, it is usually not a problem. If the state cut its spending to pay back a loan, it means people have to spent more money on another spot to make up for the budget cuts.

We see this currently in Germany, the German government is proud of their budget but at the same time the infrastructure is crumbling, trains are delayed, bridges are in need for repair or even replacement, broadband doesn't reach all places and I don't want to talk about climate change and the structural issue to which it will lead.

There is also one more thing about state debt, many people invest in state debt because it is a secure investment for the retirement and when a country no longer takes debt, this possibility is gone.

The ideology to have little or no state debt is hurting the economy and will do so in the future. And I'm not even talking about a recession or a depression which will come sooner or later.

German infrastructure is top-class, trains work quite well and bridges are not collapsing. May I ask where you got this from?

EDIT

Please don't turn this into a flame war. I am slightly worried about the effects of mainstream media, as I've seen these kind of posts on Reddit also.

People keep hearing about the low/inexistent economic growth of countries like Germany or Japan and start thinking that these countries are a deep mess. The reality is quite far from it.

LOL - He's talking about the USA.

Especially compared to America, which has awful infrastructure...

It's interesting how much design tolerances and overbuilding factor into this.

Assuming linear failure to fault (e.g. rust or structural weakening), an overbuilt bridge makes a big difference if one is skimping on maintenance costs.

I wish it were top-class, but it isn't. many bridges have structural issues and in need to be replaced or repaired and due to the fact that the DB Netz who runs the railway network has to pay for small repairs but the state pays for big ones, you can see how it is not well maintained.

Here are some more information in German though: https://www.deutschlandfunk.de/autobahnbruecken-in-deutschla... https://www.dw.com/de/bahnfahren-auf-verschleiß/a-46623921

German news. We've been neglecting our infrastructure for at least a decade now, probably more. The above comment is exaggerating only slightly.

"neglecting our infrastructure for at least a decade now" honestly struck my American funny bone. But I can understand that being frustrating from a German perspective, and I mean that respectfully. :)

> The ideology to have little or no state debt is hurting the economy and will do so in the future.

Ideology can be pretty dangerous. This seems like your main point. Back up, though:

> [...] state debt is not like personal or corparate debt. If you cut your spending to pay of a loan, it is usually not a problem.

How is it less of a problem for a person, or for a corporation, than for a government, to have to reduce spending?

Ideologies are not dangerous, they are just the eyes through which we see things. Sometimes you have to be able to see more because your ideology doesn't help you. But you will never really escape that bias.

The difference is actually very simple. Persons and corporations are not closed systems. If you safe money, the impact is very small. Even when a big corporation safes money it doesn't really matter. But the state is huge and spends a lot of money. And many companies depend on state contracts.

I give you a simple example. The German state is subsidising public transport, if the state cuts theses costs, the company providing this service has only a few choices, such as cutting service or increasing prices. These will leads the consumer to have higher costs. If the company cuts lay off people to compensate, those will lose their income and the state must even pay them unemployment benefits.

So the state budget is not really a question if something is be paid but rather by whom and at what point. It is essentially a closed system.

P.S. Very export depended countries can essentially export this partially to other countries. There is this argument that Germany did that with Greece. While Germany consolidated its budget, the debt of Greece increased.

The counterargument to the point you're making would be that taxes are essentially "closing the loop" between private and public services.

Either the state taxes and provides public services, or the state taxes less and private services are provided.

I think the bigger point is about the state's role as a consumer- and lender- of last resort.

Through its ability to deficit spend (enabled by its supposed future ability to tax) or its ability to print currency (through its central bank), there are functions the only states have access to. Which become incredibly valuable when everyone else is economically terrified.

Reply on news.ycombinator.com