Improper aggregation. Neither consumption nor taxes nor government spending is amorphous and evenly distributed. Different mechanisms have very different effects in WHO is able to consume more or less, over what timeframes.
Note that most government spending is eventually paid to workers and contractors, who use it for consumption, so it’s not clear that in aggregate it matters at all. It’s definitely clear in detail that it changes who consumes and when the consumption happens.
A good thought experiment is to compare/contrast debt reduction via inflation (just print enough money to pay it off) vs via income tax increase (non-targeted; just double the values that hold today) vs via land sales (the US government has a LOT of valuable property that could be privatized). Your analysis of and reaction to the impacts of these things will tell you a lot about your biases/priors about how wealth works in modern economies.
edit: another way of thinking about this (but reinforcing that money only matters when it’s not evenly distributed) is to realize that debt is a BALANCED timeshift. For every seller, there is a buyer. Government (and it’s beneficiaries, employees, contractors, etc.) get a bit more consumption now, with a pretty nebulous reduction in consumption later (for a different subset), and lenders (buyers of bonds) get reduced consumption now, with a well-defined additional consumption later.
That disconnect in the otherwise-balanced equation (lenders know when and how they get paid, borrowers don’t like to think about it and mostly believe other subsets will get taxed more than they) is absolutely core to the belief that government solves problems.
Improper aggregation. Neither consumption nor taxes nor government spending is amorphous and evenly distributed. Different mechanisms have very different effects in WHO is able to consume more or less, over what timeframes.
Note that most government spending is eventually paid to workers and contractors, who use it for consumption, so it’s not clear that in aggregate it matters at all. It’s definitely clear in detail that it changes who consumes and when the consumption happens.
A good thought experiment is to compare/contrast debt reduction via inflation (just print enough money to pay it off) vs via income tax increase (non-targeted; just double the values that hold today) vs via land sales (the US government has a LOT of valuable property that could be privatized). Your analysis of and reaction to the impacts of these things will tell you a lot about your biases/priors about how wealth works in modern economies.
edit: another way of thinking about this (but reinforcing that money only matters when it’s not evenly distributed) is to realize that debt is a BALANCED timeshift. For every seller, there is a buyer. Government (and it’s beneficiaries, employees, contractors, etc.) get a bit more consumption now, with a pretty nebulous reduction in consumption later (for a different subset), and lenders (buyers of bonds) get reduced consumption now, with a well-defined additional consumption later.
That disconnect in the otherwise-balanced equation (lenders know when and how they get paid, borrowers don’t like to think about it and mostly believe other subsets will get taxed more than they) is absolutely core to the belief that government solves problems.