The aggregate vs the distribution

The thesis that public debt allows the cost of public spending programs to be shifted forward in time has proven difficult for many economists to accept. Consider a simple formulation of the public debt controversy: instead of taxing to finance a rail system, a government borrows. Buchanan argues that borrowing shifts the cost of the rail system into the future, while others say that the cost remains in the present, noting the resources that went into the rail system are used up this year regardless of how it is financed. Public debt, they say, cannot be a burden on future generations because “we owe it to ourselves, [now].”….

It is irrelevant that “we owe it to ourselves,” for we are not many heads attached to one body. Some owe it to others, and it is irrelevant to note that the sum of the debts equals the sum of the credits. One could similarly aggregate over mortgage lenders and mortgage borrowers and say we owe it to ourselves, but it would be no more enlightening. Public debt allows present taxpayers to reduce their tax payments and obligates future taxpayers to amortize that debt, and it is here that the burden of the debt resides. True, the resources required to construct the rail system this year are furnished by bondholders, but those bondholders do not bear the burden of the debt simply because they are compensated sufficiently to make them willing lenders.Cafe Hayek quoting Dick Wagner

The debate rages between Krugman the collective, who aggregates over the whole, and the Austrians who think distribution matters.

Normally the way I analyze this issue is to eliminate time from the equation and go straight to probability of transaction. But we all know that works, lets look at Krugman's real problem.

Krugman does not have a democracy to work with, he can never claim that government spending can be measured in the aggregate unless he has democracy, by definition. I have to repeat this for the simple Keynesian mind. You can only measure the aggregate to the extant that lower orders of the economy are in the same relative sample space. Austrians know this, it is the local knowledge problem, and they might not believe me, but channel theory explains the local knowledge problem. No fair vote, no equilibrium, no valid measure of the aggregate.

The vote is the ultimate transaction that takes place, and governments do exist. If the vote and the economic life of the voter are at disequilbrium, the government dead weight losses increase, multipliers drop. Would a government with very good democracy ever vote to make DON BOUDREAUX a billionaire? They most assuredly will take action so someone becomes a billionaire, can't be avoided. It might be Don, I would vote for Don over someone granted a bogus patent.