Channels, Spring 2018

Page 34 Schwartz • Public Principles and Economic Legacy commences with a series of equations and procedures that culminate in a conclusion: “at State level, expansionary debt policy will be helpful for the economy in generating higher economic growth.” 112 As a result, the authors argue that the legislation limiting the ability of Indian states to issue debt should be reconsidered, precisely the opposite of Buchanan’s constitutional conclusion as a result of his work in public finance. The long-term consequences of such a change are considered only relative to economic growth and not to the alterations in the constitutional structure, individual behavior, and political outcomes that may result. In this paper, then, Buchanan’s thought is absent and his arguments are reversed. Given the ascendency of his contributions to public finance only 30 years before, such an outcome should be considered a significant shift rooted in the public finance articles of the 1990’s, which evened the playing field between the various theories that competed for dominance in previous decades. “Is Public Debt a Burden for India?” is another article that examines the impact of public debt. While these authors do consider the possibility that public debt may constitute a burden for a given public entity, they cite Franco Modigliani’s work rather than Buchanan’s. 113 Further, Barro’s overlapping generations model is referenced in the context of Ricardian Equivalence with the suggestion that public debt may not be a burden for the economy. The Keynesian orthodoxy, associated with the work of Abba Lerner in this as in other papers, is expounded to the possible conclusion that public debt and future interest payments impose no economic burden. 114 The authors directly reference Barro’s work as to the significance of Ricardian equivalence in understanding the neutral impact of public debt on the economy. 115 Once again, though, the overall presentation of the competing theories is one of ambivalence. The major historical ideas in the field of public finance are footnotes to modern mathematical inquiry and are not authoritative analyses that command a response, either of deference or rejection. The paper continues with a sophisticated application of mathematical techniques to the data in question. The relationships between public debt, interest payments, the gross primary deficit, development expenditure, and more were all examined, with the ultimate conclusion that “public debt is not a burden for India.” 116 This paper is much more limited in the scope of its arguments regarding policy, noting only that “a better debt management framework” than India presently has could be beneficial to the nation’s economic growth. 117 Nevertheless, this implies a criticism of the Indian Fiscal Responsibility Management Act, which currently stands in that country to limit the issue of debt, as Buchanan would have hoped for in the United States. Thus, his work is again ignored and his conclusions disputed in a recent article on public debt. 112 Ibid, 15 113 Debi Prasad Bal and Badri Narayan Rath, “Is Public Debt a Burden for India?”, Economic Society of Australia , ECONOMIC PAPERS, VOL. 35, NO. 2, JUNE 2016, 184. 114 Ibid, 186. 115 Ibid, 186. 116 Ibid, 199. 117 Ibid, 199.