This graph is from Thomas Piketty’s Capital in the Twenty-First Century. p. 165. Public wealth is the net worth of the government, federal, state, and local, and the estimates are explained in detail here. Net worth equals assets minus liabilities. Our GNP, which is in the range of $16.1 trillion in 2011, lets us estimate that the net worth of the US is about $350 billion. We know federal government liabilities were $10,447,662,851,807.15 at 12/31/2011. At the same date, state and local debt was about $2.9 trillion. That gives us an estimate of about $14 trillion in total public wealth, consisting of land, buildings, roads, bridges, national parks, art, and so one. That compares with total private net worth of about $63 trillion, and you have to add a lot of debt to get a full picture of total private wealth.
For comparison, here’s another of Piketty’s graphs, this one showing public and private wealth for France, Great Britain and the US for a shorter period.
These figures raise two interesting questions. First, is this a good ratio of private to public wealth? Second, that’s a lot of public debt. What did we get for the money? Both of these are political questions. The first one requires a close look at our society. Are we satisfied with our current arrangements? Are we happy about the decrepit state of our infrastructure? Are we happy with the way we provide ourselves with basic utility services, water, power, internet, transportation, and the normal services we expect of governments? No? I thought not. But we can’t do any better, can we? Tim Geithner says so in his book Stress Test, and Larry Summers assures us it’s true in his review of Geithner’s book, because of the mean Republicans or his own inadequacies or something. So let’s turn to the second question.
What exactly did we get for all that public debt that we’ve run up since 1980? Well, we bought some lovely wars, we gave bunches to political cronies who funneled a taste back to the politicians who did the funneling, we have some great boats and planes and guns. We funded some research that the private sector exploits for its own benefit. I’m thinking there must be more, but really, I can’t think of anything useful we got for the money. Oh, some of it went to prop up the bloated financial sector and to bail out the filthy rich from their crimes and civil attacks on us, but we got all that back, as we are constantly assured by our financial betters. Just ignore those complicated things like the fact that the financial sector can borrow from the Fed for free, and buy Treasuries paying interest greater than inflation, swelling their bottom lines at our expense. And the Fed, that creature of the banking sector, has bought trillions of dollars worth of heaven only knows what from the banks at heaven only knows what price to value ratios.
So here’s a story, told by Piketty in Chapter 3. Great Britain was very busy fighting wars between for most of the Seventeenth and early Eighteenth Centuries, mostly with France, but there was a side battle in North America. By 1810, UK public debt was about 187% of national income. The government, run by and for the rich, didn’t want to tax the rich to pay for all those wars, so they borrowed from the rich instead, issuing bonds paying 4-5%. Inflation was negligible during the 1800s, so that’s pretty much a real return. The government ran a primary surplus for most of the 1800s, so it had enough money to pay interest on the bonds. It’s safe to assume that this tax burden fell in large part on the working class. In France, which also ran up a large public debt, the government raised the tax on drink to make sure the rentiers could be paid. Piketty, 132.
Who exactly benefited from those wars? I’m sure average citizens thought they were getting something out of them, but at this distance we can see that it could not really matter to the average dead soldier whether he worked for British aristos or French aristos. And today, we can plainly see that none of us benefits from the idiocy of the Great Game as presently playing out in Iraq, Afghanistan, Yemen, Ukraine and pretty much everywhere. The rich benefit, though. They like their ability to foist their ideology on the rest of the world because they profit mightily. They want their interest on their $12.5 trillion in treasury obligations. They want you to pay taxes to fund them. And they don’t want to pay taxes. They aren’t part of our society. They live in their own, complete with a compliant government and police force to do their bidding.
I’m not getting my money’s worth.