Donations for Dummies
Last Sunday morning, NPR interviewed some poor sap because he donated fifty bucks to help pay off
the national debt. His uninformed contribution was part of a puff piece
about how the Treasury had received $7.7 million in such gifts so far
this year from like-minded lightweights.
Stories like this keep
popping up. I remember an iteration a while back in which the
well-meaning widow of a Connecticut university president suggested bake
sales to aid in our arrears.
If we lived in a land with
honest media, you would expect them to use such occasions to educate
Americans about the debt. The NPR reporter could have begun by explaining that the national debt is not the same as a payday loan. Instead, it's a financial
product that’s bought and sold around the clock around the world. Or by noting that some of those who trade the debt ‘own’ their piece of it for the instant it now takes to make or lose money on it.
Governments have two ways of raising money: by taxes and by borrowing.
Taxes are the fairest and most efficient way---if you can get everyone
to pay them. Borrowing is basically unfair since it shifts wealth from
tax payers to those who lend money to the government. Those creditors
want government to borrow ever more money because that enriches and enlarges the credit
markets. Should the
debt be magically paid in full tomorrow morning, those markets
would collapse and Wall Street would blow away as if hit by a dozen
Hurricane Sandys at once.
The soaring increase in our national
debt parallels the explosion of all sorts of debt. We used to make money
by making stuff, now we make it by borrowing, buying, lending, leasing, selling and swapping a bewildering variety of financial paper, some of which carries
the imprint of the U.S. Treasury. This endless production of debt, otherwise known as
financial services, has become the biggest of our big businesses.
The market in U.S. debt is only one of the countless economic mechanisms designed
to make the richest of the rich richer and send the rest of us to gobbing gruel at the poor farm. This has reached a point where the top one percent have as much wealth as the
bottom 90 percent. Even Warren Buffett thinks that's suicidal for capitalism. As a result we’re heading, and quickly, in the
direction of the feudal banana republics where a few families own everything
worth owning in the country.
So a well-meaning economic simpleton making a donation to
lower the national debt is in effect handing a
penny to Abdullah, king of the Saudis, or, worse, Donald Trump. That NPR
takes debt donors seriously only shows how unserious it is.