It is amazing to me how frequently I reevaluate my old minarchist views as a new anarchist. Positions that seemed so incredibly important as a limited government libertarian now seem trivial, irrelevant, and sometimes even wrong-headed coming from the standpoint of an anarcho-capitalist. One such topic that is hotly debated is the raising of the federal debt ceiling. Case in point, Judge Andrew Napolitano admonishes Congressmen five nights each week on his show Freedom Watch not to increase the amount the United States government can borrow. There are even many anarchists, particularly at LRC, that preach a balanced federal budget. I’d like to offer a dissenting opinion.
Putting aside any Constitutional or fiscally sound reasoning, the entire notion of the federal government limiting the amount it can borrow is patently absurd. This is because debtors are not the entities that limit credit lines. Creditors are. Every debtor wants an infinite credit line. They may choose only to borrow a fraction of the amount credited to it, but that is not what is being debated. The current question is how much the federal government is allowed to borrow. Given its proclivity for ever increased spending, the answer is determined solely by how much creditors are willing to lend. Furthermore, students of Austrian School economics understand that any breach in the government’s credit line will immediately be covered by the debasement of its currency. This, likely, has been happening for some time.
The claim many minarchists make is that the federal budget could be balanced without defaulting on its creditors. But this position is either disingenuous or naive. The truth is that the government’s creditors are not only individuals and institutions that hold Treasury Bills, but also all of the recipients and soon-to-be recipients of Social Security, Medicare, and Medicaid. Regardless of whether or not an individual paid into these programs is beside the point. The federal government made a promise to pay. And not fulfilling its promise is a de facto default.
It is also inconsequential if any of the government’s creditors deserve redemption of their claims. This is because the United States government made promises it could not make good on under any circumstances. Even under the best minarchist scenarios, such as ending all foreign and domestic militarism, entitlement spending greatly exceeds possible revenues. Default is inevitable.
The Two Choices
Understanding the severity of the issue, we are faced with a dilemma. If the United States were to balance its budget millions would be denied the care they have come to expect. Under normal circumstances we could feel confident that the free-market and free individuals could come to the rescue and fill the void. However, the amount of resources and services the baby boomer generation expects to receive is far too great, even for the free-market to handle. This sort of default, then, will only reinforce the notion that reduced government spending equals abandonment for the elderly, indigent, and poverty stricken, and that the free-market is inept at social welfare.
On the other hand, if the United States does not balance its budget, those individuals dependent on government will still be denied the care they have come to expect. The currency will be destroyed and many millions more will be forced economically to cast off the yoke statism and debt slavery in order to survive. In other words, the state will lose all of its legitimacy as caregiver and the philosophy of liberty will grow in popularity.
The United States government has promised the moon to millions of people. Neither the state nor the free-market can deliver what is expected. These people lived their lives accordingly and squandered vast resources believing that the state would supplement, if not outright provide, their retirement and health care. The elder generation, as well as their children, will be sorely disappointed when care is denied. The state can scapegoat the free-market if it curbs spending. If it chooses to destroy the currency, however, then the philosophy of liberty stands a chance.
This is not to say that anarcho-capitalists should advocate any government policies. This is the state’s problem and we should intend on letting it stay as such. Taking any ownership of it is foolhardy. Our efforts should not be geared towards influencing the body politic, but instead to labor for the voluntary society that we envision.