A FREE NATION DEEP IN DEBT

Democracies are habitually broke, and for good reasons revealed in this provocative study by a former investment banker.

“Liberty and credit,” wrote a 19th-century French finance minister, “are always united.” His English counterpart would surely have agreed, suggests Macdonald: in ridding Europe of Napoleon and assuring liberty of a certain kind, the British government amassed a debt of more than £800,000,000, a sum that vastly outstripped the gross national product. No matter, writes Macdonald, for politicians of the recent past understood that “there was a connection between political freedom and public debt.” They also understood, as contemporary politicians seem loath to do, that the growth of democracy requires vast outlays of money, particularly in the matter of training an educated workforce. Following the work of Niall Ferguson and other contemporary economic historians, first-time author Macdonald pursues any number of promising lines of inquiry, suggesting here that democratic institutions have been furthered through time by the requirements of financing wars, there that universal suffrage was hastened along by the development of public savings banks, and elsewhere that autocracies attaining a certain level of gross domestic product find it hard to prevent democracy from taking hold, while those who insist on holding absolute power are unable to advance economically. Drawing on a broad range of historical examples over thousands of years, he shows the political implications of the quest for prosperity and examines options that include keeping the coffers of the state perpetually empty. Never mind those who decry deficit spending; as Macdonald notes, “peacetime deficits, however much finger-wagging they may incite, are relatively small.” Such lessons are likely to give advocates of the Thomas Friedman globalization-is-good school much fuel for their side of the debate, but Macdonald is careful not to oversimplify—and certainly not to cheerlead for “a new global elite who view national governments as largely irrelevant to their needs.”

Altogether fascinating, and a sound investment for readers seeking high return in the form of useful ideas.