Public Debt, Whose Debt?
Published in Hurriyet Gazetesi
(Turkey) on 24 April 2013
by Ege Cansen (link to original)
(Turkey) on 24 April 2013
by Ege Cansen (link to original)
Translated from
by Vedat Şafak Yami.
Edited by Jane Lee.
One of the metrics that is taken into consideration when ranking the economy of a nation is the ratio of "public debt" to the "national income," which is also called gross domestic product.
This rate in English is expressed as "public debt/gross domestic product." In Turkey, this ratio is below 40 percent. It may be recognized as a great achievement of a low-level economy. It is anticipated that for countries in the European Union, this ratio should not exceed 60 percent. However, in practice this ratio is 85 percent in Germany and 105 percent in the United States. It is even higher than 200 percent in Japan. So according to this alignment, Japan sank and the EU and U.S. economies are agonizing, whereas Turkey is well-endowed. Hear it but don’t believe!
You Don’t Understand These Calculations
Don’t oppose at once saying, “Why do we not understand it?” I don’t understand it very well yet, either. [Even] the reputable economists of Harvard University don’t understand. They said: “If the ratio exceeds 90 percent, the growth will stop and the economy of the country may even fall off the cliff.”* The United States hasn’t fallen off the cliff and is doing well, though. Another team of economists wrote an article saying: “The Harvard team of economists were wrong. We’ve researched and calculated that the growth will stop and the country will wreck if the ratio exceeds 115 percent.”* Just at that moment the economy of Japan, with a debt exceeding 200 percent, starts growing. Nothing less than “a riddle wrapped up in an enigma.”
There Is No Pi Constant in Economic Sciences
As you know, Pi is the ratio of a circle's circumference to its diameter and is approximately equal to 3.1416. Contrary to geometry, in economic sciences there are no constants like the number Pi. There can’t be such constants as Pi in economics because the magnitude of an economy cannot be measured by unchangeable constants and have neither strictly accurate definitions nor precise proportions like the ratio between a circumference and its diameter. For example, the limits of the meaning of “public” and “debt,” which are two frequently used terms in “public debt or national debt/GDP,” are unclear. Books define “public debt” as the total amount of money owed by the government to creditors. This is certainly an insufficient definition. Central banks are considered private creditors in this definition. Are they really private, for God’s sake? Furthermore, public debt — or obligation — is unclear. For example, the future deficit of Social Security is not public debt in this scheme, but when it is due, a government is responsible for paying it like a bond loan. Governments won’t fall behind in paying the old-age pensions because they have the authority to tax people. Nothing actually matters as long as there is no foreign debt.
Last word: People never run out of money as governments are always in debt.
*Editor’s note: This quotation, accurately translated, could not be verified.
This rate in English is expressed as "public debt/gross domestic product." In Turkey, this ratio is below 40 percent. It may be recognized as a great achievement of a low-level economy. It is anticipated that for countries in the European Union, this ratio should not exceed 60 percent. However, in practice this ratio is 85 percent in Germany and 105 percent in the United States. It is even higher than 200 percent in Japan. So according to this alignment, Japan sank and the EU and U.S. economies are agonizing, whereas Turkey is well-endowed. Hear it but don’t believe!
You Don’t Understand These Calculations
Don’t oppose at once saying, “Why do we not understand it?” I don’t understand it very well yet, either. [Even] the reputable economists of Harvard University don’t understand. They said: “If the ratio exceeds 90 percent, the growth will stop and the economy of the country may even fall off the cliff.”* The United States hasn’t fallen off the cliff and is doing well, though. Another team of economists wrote an article saying: “The Harvard team of economists were wrong. We’ve researched and calculated that the growth will stop and the country will wreck if the ratio exceeds 115 percent.”* Just at that moment the economy of Japan, with a debt exceeding 200 percent, starts growing. Nothing less than “a riddle wrapped up in an enigma.”
There Is No Pi Constant in Economic Sciences
As you know, Pi is the ratio of a circle's circumference to its diameter and is approximately equal to 3.1416. Contrary to geometry, in economic sciences there are no constants like the number Pi. There can’t be such constants as Pi in economics because the magnitude of an economy cannot be measured by unchangeable constants and have neither strictly accurate definitions nor precise proportions like the ratio between a circumference and its diameter. For example, the limits of the meaning of “public” and “debt,” which are two frequently used terms in “public debt or national debt/GDP,” are unclear. Books define “public debt” as the total amount of money owed by the government to creditors. This is certainly an insufficient definition. Central banks are considered private creditors in this definition. Are they really private, for God’s sake? Furthermore, public debt — or obligation — is unclear. For example, the future deficit of Social Security is not public debt in this scheme, but when it is due, a government is responsible for paying it like a bond loan. Governments won’t fall behind in paying the old-age pensions because they have the authority to tax people. Nothing actually matters as long as there is no foreign debt.
Last word: People never run out of money as governments are always in debt.
*Editor’s note: This quotation, accurately translated, could not be verified.
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