Bill Us Later

Why we don’t need to worry too much about the national debt.

Should we worry about future debt?

Nothing brings out the Republican Party’s concern for children like the national debt. Last week, when the White House increased its 10-year deficit projection by $2 trillion, some members of the GOP shifted from discussing the threat Obama’s health reforms pose to the elderly to warning of the dangers his spending poses to the young. “We must proceed with extreme caution before putting in place a huge and costly new program that will threaten our economy and the future of our children,”said Sen. Judd Gregg of New Hampshire. House Minority Leader John Boehner greeted the news with an equally protective sentiment: “The Democrats’ out-of-control spending binge is burying our children and grandchildren under a mountain of unsustainable debt.”

Such worries have an honorable political lineage. What kind of policymaker could be against children? Sure, it’s all well and good to debate the size and meaning of the federal debt. But can anyone seriously question that we are imposing an ever-increasing and unfair burden on the children who might be ill-equipped to bear the cost?

Well, yes. There is a good, simple reason for taking a more selfish view of the cost our present debt imposes on future Americans: All else being equal, those future Americans will be leading better, easier, richer lives. So just as there are good arguments for imposing costs on the present-day rich for the benefit of the present-day poor, there are good arguments for imposing costs on America’s wealthy future for the sake of its relatively impoverished present.

The main reason that the future should be better off is staring at you from the light-emitting diodes in the back of your screen: improvements in technology. Markets crash and deficits rise, but through it all, improving technology has continued to tempt us with an ever-expanding array of consumption options. Even if the value of your house has declined, the number of things you can do on your phone probably hasn’t.

Nor are the benefits of increased productivity limited to personal technology. One example: It is far easier to find information, organize it appropriately and send it all to a colleague (or an editor) than it was five or 10 or 20 years ago. Over the past 60 years, the country’s private-sector “multifactor productivity“—which measures output based on a combination of inputs (like labor and capital) and is our closest measure of the impact of technology on productivity—has increased at an average rate of 1.4 percent annually. Even during the most unproductive stretch in recent American history, between 1973 and ‘90, multifactor productivity still increased (by 0.6 percent annually).

This is not to say that the gains of additional technology are always distributed evenly. But improvements in technology do increase the size of the pie. Technological improvements decrease the amount of time it takes to accomplish tasks and leave open additional hours to earn more income or enjoy more leisure. And even if you believe that many of these innovations are also powerful tools of procrastination—and I do—at least appreciate that you have more time to fritter away.

Still, the question lingers: Is it possible that more debt will result in less innovation? There is little reason to expect it to. It’s certainly true that the pace of technological improvement is affected by other variables in the economy, and it’s vaguely plausible to imagine that one such factor might be the size of the national debt. (The argument would go like this: Today’s debt is tomorrow’s tax—someone’s got to pay for it, after all—and one effect of higher taxes might be a reduced incentive, or less capital, to invent fabulous new technologies.) But the relationship between technological improvement and other economic variables is not well-understood (in the most common long-run growth model it is an “exogenous” variable—determined by forces outside the model).

And there is no evidence that debt and taxes have had a particularly profound impact on American innovation. Some of the greatest years for technological improvement in the 20th century—the late 1940s and early ‘50s—were years of debt and taxes high enough to make John Boehner run for cover under the budget estimates of today.

And even if technology improves less rapidly in the future, it’s hard to imagine our level of technology actually falling. There are some quirky historical examples of societies actually losing expertise—the disappearance of gunsmithing in ancient Japan, perhaps, or the accumulated wisdom of the Roman Empire. But it is rare. The level of technology in the economy isn’t the physical accumulation of vehicles and factories and tools, which wear out after extended use. And it’s not like the size of the labor force, the growth of which waxes and wanes from generation to generation. It’s the knowledge of how to squeeze more stuff out of less time. The technological wizardry for building an iPhone or an intercontinental ballistic missile cannot be easily whisked away by the sands of history.

Is that past performance indicative of future success? Perhaps not. Perhaps we could find ourselves in a dystopian second dark age, in which the previously expanding chain of shared human knowledge is severed. This is the basis for many fine science fiction novels. But if a benighted dystopia is in our future, our children have an awful lot more to worry about than the national debt.