Our Rulers Do Not Know Why They Dislike Government Debt

Table 3: The Perceived Importance of Problems Facing U.S.A.

Problem	% Wealthy Saying "Very Important"
Budget deficits	87
Unemployment	84
Education	79
International terrorism	74
Energy supply	70
Health care	57
Child poverty	56
Loss of traditional values	52
Trade deficits	36
Inflation	26
Climate change	16

A few weeks ago, Paul Krugman mentioned a recent paper by Page, Bartels, and Seawright. I believe it is this one:

• Benjamin I. Page, Larry M. Bartels, and Jason Seawright (March 2013). Democracy and the Policy Preferences of Wealthy Americans, Perspectives on Politics, V. 11, No. 1: pp. 51-73.

This paper reports a pilot study on the political views of the wealthiest Americans. The authors gathered data in interviews with residents drawn from a sample of the very wealthy in Chicago. Page et al. motivate their interest in the policy preferences of wealthy Americans by noting recent research demonstrating that the vast majority of the country has little to no influence on policy decisions made in the Federal government. They hope to expand their research to a national sample in the future.

They report views on many areas of public policy. Generally, our rulers are reactionary and the opposite of benevolent. Business backgrounds in finance or industry, inherited wealth or "earned" wealth, were not correlated with differences in views. The sample size might be too small to provide enough power to distinguish, among the wealthy, effects of where they sit on where they stand. Professionals, mainly lawyers and doctors, tended to be slightly less reactionary.

Above, I reproduce Table 3 from this paper. Those surveyed "think" government budget deficits are the biggest problem facing the United States. One might suggest that lowering such deficits could be only an intermediate, instrumental goal. But towards what end? Page et al. note that they do not seem worried about deficits leading to high rates of inflation; notice how low inflation is as a worry. Page et al. suggest that the wealthy have bought into the "crowding out" argument. Of course, theoretically, supply and demand for savings does not determine interest rates. Empirically, the crowding out argument makes no sense in the current conjuncture either.

I have an old explanation of this puzzle. Paul Krugman recently cited Michal Kalecki's explanation of why capitalists dislike increased government spending in depressions, even though such fiscal policy successfully dampens downswings in business activity. Krugman is not just depending on the capability of Kalecki's explanation to make sense of history long post-dating Kalecki's contribution. Krugman is also aware of the quantitative survey data I cite above.