As some may know, I argue for a much greater focus on borrowing as a way to fund governmental functions. Taxation and borrowing are the ways in which a government lacking resources pays for its functions, but taxation is the most destructive and iniquitous instrument in any economy. An article recently appeared titled ‘r<g’ whose author, John Cochrane, an economist more on the right, raises the possibility that a government could borrow indefinitely as long as the cost of interest for government, r, was inferior to the rate of growth, g, in the economy. After a limited examination of the idea, Cochrane rejects it on the basis that government could never invest so wisely and prudently such that r generally would be less than g.
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