by Chauncey Tinker – 31 May 2022
The left-wing mainstream media are generally dismissive of concerns about the size of the national debts of Western nations, see for example this article from CNN (February 2022):
Indeed although the US national debt has risen to a new high, as a percentage of GDP it is today only slightly above the level it was at immediately following the Second World War, as seen in this graph from Long Term Trends:
However what is generally overlooked (in the left-wing media particularly) is the size of the unfunded liabilities that the government now has. By unfunded liabilities we mean the promises that present and past governments have made that are continuing to be paid for today. Some economists have been trying to raise the alarm about the scale of these unfunded liabilities, that grow ever larger as successive governments spend and make generous promises for future spending. See for example this article from the Investor Times (published last year):
See also this article from Forbes from 2017:
Even right-leaning media sources tend to focus primarily on the national debt and fail to take into account the scale of the ever growing unfunded liabilities.
In my last post I tried to raise the alarm about the very similar situation we face in the UK, however I was met with either complacency or dismissive responses such as:
You are confusing unfunded liabilities with debt, the government can simply reduce spending.
The problem with this argument is that expectations of the things that governments can do for people have been greatly expanding over time, and it becomes ever harder for politicians to get elected on a platform for making spending reductions of any kind. In the last post I drew attention to the fact that for example spending on the NHS (as a percentage of GDP) has more than doubled since the NHS was created. In the current political climate in the UK criticizing the NHS is tantamount to heresy in the eyes of many people, and politicians who try to raise concerns about NHS spending are fiercely vilified in the media. To go so far as to even suggest that the NHS ought to be privatized is to commit political suicide, as Nigel Farage discovered to his cost. From the Guardian:
Note how the article describes how Nigel Farage was "caught on camera" as if he had committed some sort of crime:
caught on camera telling Ukip supporters that the state-funded NHS should move towards an insurance-based system run by private companies
Even within UKIP his previous statements had caused tensions, and he was forced to change his public stance (I can't vouch for the absolute truthfulness of these MSM articles of course, but you get the gist). From the Independent:
Generally speaking, the electoral prospects of any UK politician who dares to question the NHS from a financial point of view are very poor, and yet NHS spending accounts for a very large and ever growing portion of government spending in the UK.
Returning to the situation in the USA, there again government spending on healthcare has risen greatly. From Wikipedia:
So the same problem now exists in the US, expectations have been raised that the government will take an ever growing degree of responsibility for healthcare, and it has become very difficult politically (if not impossible) to reverse that trend. As our populations age the percentage of elderly dependents on the state increases while the percentage of taxpayers in the overall population correspondingly decreases, so that political pressure grows ever stronger as well.
In addition the US has a much larger continuing commitment to defence, which, at least according to this source (from the website of a former US Secretary of Commerce), dwarfs the defence spending of all other nations including China (article published July 2021):
Although national debt alone as a percentage of GDP may not look particularly alarming today, unfunded liabilities have vastly increased over the years, and the trend in both the UK and the US has been relentlessly upwards. What this means is that governments today have much less room for manoeuvre than they did say immediately after WWII, because there is not enough income from tax receipts to cover those liabilities, plus pay the interest on the debt, let alone anything left with which to reduce the overall debt, and so the debt just keeps growing. In short, only when we take unfunded liabilities into consideration alongside the national debt figure do we get a true picture of the national debt situation. When you do that you are forced to realize that, unless a miracle occurs, we are on a trajectory that will probably lead to disaster sooner or later.
What do you think? Please leave a comment below.