The economics world is focusing again on fiscal policy and the level of government borrowing. In particular, battle lines are being drawn between those who believe that increasing government borrowing will help the economy and those who, like me, believe that more borrowing will add to our serious economic problems.
However, this focus on whether increasing borrowing will lead to a short-term increase in growth obscures the essential nature of the national debt. When the government borrows it spends now and sends the bill to a future generation of taxpayers: the government takes a conscious decision to impose the costs of the current generations consumption onto a future generation.
To do this is inequitable. But it would not be so bad if our national debt was only equal to the figure that Alistair Darling has announced. Real public borrowing goes way beyond the figure that governments admit to in their national accounts.
The most obvious hidden item is that from future pension liabilities. In state pension systems there is no fund accumulated to meet future pensions. Instead, the current generation of workers promises itself pensions which are to be paid by future generations of taxpayers. The French call this inter-generational solidarity because the implicit agreement is that the next generation of voters will vote itself pensions