Notes 4 Getting Our Priorities Right: What Does Justice Require That We Do? Part 2 1 . See generally Adam Smith, “Public Debt,” in The Wealth of Nations (New York: Modern Library, 2000 [1776]), Bk. 5, Ch. 3, pp. 981–1028; David Hume, “Of Public Credit,” in Hume: Political Essays (Cambridge: Cambridge University Press, 1994[1752]), pp. 166–178; J. S. Mill, “Of a National Debt,” in Principles of Political Economy (Amherst, NY: Prometheus Books, 2004[1848]), Bk. 5, Ch. 7; Jean-Baptiste Say, “Of National Debt,” in A Treatise on Political Economy , trans. from the 4th edn. by C. R. Prinsep (Philadelphia, PA: Grigg & Elliot, 5th edn. 1832[1803]), Bk. 3, Ch. 9. 2 . See Walter F. Stettner, “Carl Dietzel, Public Expenditures and the Public Debt,” in Income, Employment and Public Policy: Essays in Honor of Alvin H. Hansen (New York: W.W. Norton & Co., 1948), pp. 276–299. 3 . See Stettner, “Carl Dietzel, Public Expenditures and the Public Debt”; Jesse Burkhead, “The Balanced Budget,” Quarterly Journal of Economics 68 (1954): 191–216. 4 . See, e.g., Burkhead, “The Balanced Budget,” esp. 193–94; John Christian Laursen and Greg Coolidge, “David Hume and Public Debt: Crying Wolf?” Hume Studies 20 (1994): 143–150. 5 . See Alvin H. Hansen, Economic Policy and Full Employment (New York: McGraw- Hill, 1947), pp. 4–5. 6 . See David Ricardo, The Principles of Political Economy and Taxation (London: J.M. Dent & Sons, 1911), pp. 244–249 and “The Funding System” [1820] in The Works and Correspondence of David Ricardo, Vol. 1V Pamphlets and Papers 1815– 1823 (Indianapolis, IN: Liberty Fund); Robert J. Barro, “Are Government Bonds Net Wealth?” Journal of Political Economy 82 (1974): 1095–1117. For critical dis- cussion of this view, see James M. Buchanan, “Barro on the Ricardian Equivalence Theorem,” Journal of Political Economy 84 (1976): 376–342; Robert J. Barro, “The Ricardian Approach to Budget Deficits,” The Journal of Economic Perspectives 3 (1989): 37–54; B. Douglass Bernheim, “A Neoclassical Perspective on Budget Deficits,” The Journal of Economic Perspectives 3 (1989): 55–72, esp. 63–67. 7 . See Samuel Hollander, The Economics of Thomas Robert Malthus (Toronto: University of Toronto Press, 1997), pp. 623–628; Takuo Dome, “Malthus on Taxation and National Debt,” History of Political Economy 29 (1997): 275–294. 132 ● Notes 8 . For an excellent discussion of these issues, see Stettner, “Carl Dietzel, Public Expenditures and the Public Debt” and Alvin H. Hansen, Fiscal Policy and Business Cycles (New York: Norton & Co., 1941), pp. 146–152. 9 . See, e.g., Joseph A. Schumpeter, “Depressions,” in Essays on Entrepreneurs, Innovations, Business Cycles, and the Evolution of Capitalism (New Brunswick, NJ: Transaction Publishers, 1989) at p. 115: “The chief difficulty of [remedies for eco- nomic depressions] lies in the fact that depressions are not simply evils, which we might attempt to suppress, but—perhaps undesirable—forms of something which has to be done, namely adjustment to previous economic change. Most of what would be effective in remedying a depression would be equally effective in prevent- ing this adjustment. This is especially true of inflation, which would, if pushed far enough, undoubtedly turn depression into the sham prosperity so familiar from European postwar experience, but which if carried to that point, would, in the end, lead to a collapse worse than the one it was called in to remedy” (emphasis added). 10 . See Mark Blythe, Austerity: The History of a Dangerous Idea (Oxford: Oxford University Press, 2013), p. 224 (noting that the level of debt in the countries with the most severe austerity programs has actually increased rather than decreased); Eduardo Porter, “Local Politics Are Fracturing European Unity,” The New York Times (February 3, 2015) (despite all the pain of austerity, “debt-to-GDP ratios are nevertheless much higher than before the crisis,” according to Jeffrey Frankel of Harvard’s Kennedy School); Liz Alderman, “Banks Take on European Debt, Despite Underlying Problems,” The New York Times (January 21, 2014) (austerity has choked growth so much that rather than falling, debt as a percentage of GDP has instead risen in Greece, Ireland, Spain, Italy, and Portugal); J. Bradford DeLong, “‘Liquidation’ Cycles and the Great Depression” (Cambridge: Harvard University Xerox, June 1991) (noting the same was true during the Great Depression); Floyd Norris, “Inflation? Deflation Is the New Risk,” The New York Times (October 30, 2014) (noting that between 2012 and 2013, after years of strict austerity measures, the collective national debt of the 18-nation euro zone rose 7.8%, and their collec- tive debt-to-GDP ratio rose 5.2%). 11 . McKinsey & Company, “Debt and (Not Much) Deleveraging,” McKinsey Global Institute (February 2015) ( http://www.mckinsey.com/insights/economic_studies/ debt_and_not_much_deleveraging ). 12 . See Lawrence H. White, The Clash of Economic Ideas: The Great Policy Experiments of the Last Hundred Years (Cambridge: Cambridge University Press, 2012), p. 386. 13 . Smith, The Wealth of Nations , Bk. 4, Ch. 2, p. 486. 14 . Say, A Treatise on Political Economy , Bk. 3, Ch. 5, p. 402. 15 . See Abba P. Lerner, “The Burden of the National Debt,” in Income, Employment and Public Policy: Essays in Honour of Alvin H. Hansen , ed. Lloyd A. Metzler (New York: W.W. Norton & Co, 1948), pp. 255–275, 256–257. 16 . Indeed, in the face of what I will soon show to be the wreckage austerity has wrought in Greece, various other nations, and even Europe as a whole, the President of Brazil has just offered the family analogy as the reason why Brazil must institute its own austerity program. See Paolo Trevisani and Rogerio Jelmayer, “Brazil’s Dilma Rousseff Defends Austerity Measures in TV Address,” The Wall Street Journal (March 8, 2015) (“You who are a housewife or the father of a family know what it is . Sometimes we have to rein in expenses to keep our budget form going out of control . to ensure our future”). Notes ● 133 17 . See Paul Krugman, A Country Is Not a Company (Boston: Harvard Business Press, 2009); “The Austerity Agenda,” The New York Times (May 31, 2012) (discussing why “an economy is not like an indebted family”); “Nobody Understands Debt,” The New York Times (February 9, 2015). 18 . See Eduardo Porter, “At the Polls, Choose Your Capitalism,” The New York Times (October 30, 2012) (the United States is much less globalized than most other rich countries—foreign trade peaked at about 31% of GDP in 2008; in contrast it amounted to 69% in Canada that year). 19 . See, e.g., Hiroko Tabuchi, “In Reversal of Earlier Quarters, Data Suggests Japan Is Near Recession,” The New York Times (November 11, 2012) (Japanese economy “hurt by a slump in exports amid economic woes in Europe,” a major trading part- ner, at least in part); Reuters, “Poll-British Economy to Limp through 2013, No More QE,” The New York Times (November 15, 2012) (“Demand for UK exports from the euro zone, Britain’s main trading partner, is also withering, in part because of austerity there. That leaves little hope for an export-driven rebound, no matter how weak the pound may be”); Floyd Norris, “Production Sags, and Even Germany Is Affected,” The New York Times (November 16, 2012) (“Germany has slowed because weak global demand, particularly for the major machinery that Germany exports, is creating lower demand for Germany’s exports”). 20. See David Jolly, “Daimler Abandons Forecast amid Dismal Market,” The New York Times (April 24, 2013) (quoting Daimler corporate press release in which Daimler revised down its profit estimates). 21 . See Paul Krugman, “Dwindling Deficit Disorder” (March 10, 2013); “Keynes Was Right,” The New York Times (December 29, 2011); and “Friedrich Hayek, Zombie,” The New York Times (March 29, 2011). 22 . See generally Mark Blythe, Austerity: The History of a Dangerous Idea (Oxford: Oxford University Press, 2013), pp. 178–204 (discussing various examples of states that tired austerity in response to the Great Depression and the disastrous results such an approach had); Fabian Linder, “European Austerity—Is This 1931 All over Again? Social Europe (November 23, 2011) (describing the uncanny parallels between the attitude of Germany and the major European institutions toward Greece and other “peripheral” members of the euro zone now and the attitude of the United States and the other Allied powers toward Germany in 1931) ( http://www.socialeurope.eu/2011/11/european-austerity-is-this-1931-all- over-again/ ). 23 . See, e.g., Smith, Wealth of Nations , Bk. 5, Ch. 3, pp. 1002–1003; Mill, Principles of Political Economy , Bk. 5, Ch. 7, Sec. 1, p. 797. 24 . See Ministry of Labour, Memoranda on Certain Proposals Relating to Unemployment (London: Stationary Office, 1929), esp. pp. 43–54. The Treasury View was a response to the Liberal Party’s plan for public works projects that were designed to put the United Kingdom back to work in the wake of the Great Depression and set forth in the pamphlet We Can Conquer Unemployment: Mr. Lloyd George’s Pledge (London: Cassell and Company, 1929). The Liberal Pledge was supported by Keynes in Can Lloyd George Do It? (London: Nation and Athenaeum, 1929). 25 . See Janet L. Yellen, “Symposium on the Budget Deficit,” The Journal of Economic Perspectives 3 (1989): 17–21, 18. 26 . See Josh Bivens, “GDP Growth Is Unlikely to Spur Real Improvements in the Labor Market,” Economic Policy Institute (November 7, 2013). 27 . James Tobin, “Who Is Crowding out What?” in Policies for Prosperity (Cambridge: MIT Press, 1987), pp. 215–217, 215. 134 ● Notes 28 . See, e.g., Roger W. Spencer and William F. Yohe, “The ‘Crowding Out’ of Private Expenditures by Fiscal Policy Actions,” Federal Reserve Bank of St. Louis , Reprint No.