Kemp and the National Debt


Jack Kemp has an interesting view on the national debt. He believes that the government should not hasten to retire it but should rather concentrate on tax and regulatory relief. He says that these policies will stimulate the economy and bring down the debt faster than paying it back directly.

The four graphs illustrate his thinking. In Graph 1, we start with a debt of 5 trillion and a gross domestic product (GDP) of 7 trillion. Over 8 years, the GDP grows by 1 trillion and the and the debt is paid down by 1 trillion. Graph 2 shows the debt as percent of GDP. It drops from 70% to 50%.

In Graph 3, we start with the same figures; but over 8 years the stimulated economy produces a 15 trillion dollar GDP and the debt is left the same. Graph 4 shows that the debt has dropped from 70% to 33% of the GDP. In Kemp's model, the debt becomes increasingly irrelevant.

These figures have been simplified and exaggerated to show Kemp's point. A majority of economists, particularly politically liberal economists, would insist that Kemp's historical examples do not prove his thesis. They would declare this strategy "voodoo economics." Ironically, many of these economists believe in Keynes' theory that you can stimulate the economy by governmental borrowing. In fact, Kemp's ideas are simply the free market analogy to Keynes ideas.

My objection to Kemp is that he seeks to uphold our present entitlement system by creating an economy robust enough to afford it. I don't like our present system to begin with; but there's another problem. As the economy becomes better, the beneficiaries of entitlements will make greater and greater demands. President Clinton and Republicans declared the federal budget in balance. Clinton then suggested a multi-billion dollar baby-sitting entitlement program for working mothers. No society can ever get rich enough to fill the demand for free taxpayer money.

I agree with Kemp on a fundamental point. If people are left alone by the state, they will seek to make themselves as rich as possible and the society as a whole will become wealthier. The other view is that the state lifts people out of poverty. This view contains the unstated premise that people left to their own devices would naturally sink into poverty and the society would become poorer.

Some anarchists see the economy as a class struggle for limited goods and the state as a partner of the wealthier classes. This is left-wing anarchist thinking. Of course, the state does and always will do the bidding of its wealthier citizens. However, I don't believe that people want bring down millionaires; I believe that people want to become millionaires. I know that's what I want.

Those who preach big government assume that that natural tendency of people is to become weak, sick, poor, stupid, and ugly. We who attack government assert that people fervently seek to become strong, healthy, rich, wise, and beautiful. More often than not, the state sets up barriers to achievement and punishes success.

I'm a "supply-side" anarchist. I believe that the state will wither away only when the people become great. I applaud all honest achievements and successes. Those who are strong, rich, and wise see the state as an annoyance and a parasite. I hope the whole world will be filled with such people. Do you want to find people who hate government? Look for people who are earnestly trying to provide for their own welfare. Look for people who accept the responsibility for their own actions. The more people become like that, the more government becomes irrelevant.