He is confused. It is not the government’s debts that will be eliminated by 2017 but (most of) its deficit – the amount by which its spending exceeds its income. Government debt will continue to grow until 2017, reaching £1.3 trillion.
Confusing debts and deficits displays embarrassing economic ignorance in a deputy prime minister. Alas, Clegg does not seem to have given morality much thought either. The idea that we have a duty to “wipe the slate clean” for future generations is bizarre.
Future generations will inherit from us not only the government’s debts but the enormous wealth that has been accumulated over the ages. Consider a child born in London today. She comes into a world already stocked with roads, ports, houses, hospitals and so on and on and on. She inherits valuable institutions, such as the rule of law, that took centuries to develop. And, most importantly, she enters a world filled with scientific knowledge that will make her life far better than it would have been only 100 years ago. Does Clegg really believe we have a moral duty to destroy all of this so that new-born children inherit a clean slate?
The average Brit consumes about £30,000 a year more than a subsistence farmer or hunter gatherer. We do not create this income from a clean slate; we start from an inherited foundation of human achievement. Being born any time since the industrial revolution is a windfall gain. Today it is worth about £1m (assuming a life expectancy of 80 and discount rate of 3 per cent). Government debt is about £20,000 per UK citizen. Deduct this inherited debt from the windfall. Those born today are starting £980,000 to the good. Are we really morally bound, as Clegg says, to eliminate this debt and enlarge their windfall by 2 per cent?
Those who talk about our obligations to future generation typically get things the wrong way around. Being born in 1970 rather than 1870 was good luck. Being born in 2070 rather than 1970 is also likely to be good luck. Making sacrifices for the sake of future generations would transfer wealth from the less fortunate to the more fortunate. It is a bizarre thing to recommend, especially for someone like Clegg, who normally thinks transfers should flow in the opposite direction.
There are good reasons for the government to cut its spending. But our debt to future generations is not among them, because it does not exist.
Jamie Whyte is a senior fellow of the Cobden Centre.