Von der (Un-)Möglichkeit ausgeglichener Haushalte / The Impossibility of balanced budgets

Berthold Norbert and Koch Daniel

ORDO. Jahrbuch für die Ordnung von Wirtschaft und Gesellschaft, 2008, vol. 59, issue 1, 39-62

Abstract: Public debt is here understood as a negative external effect, caused by politicians trying to reduce the costs of their political offer, thus gaining advantages in the political competition.The realities of political competition and the possibility of exercising these external effects, put the politicians in a dilemma situation: the avoidance of public deficits - a cooperation for the common good - becomes impossible, public debts inevitably rise. Exceptions occur only if the cost of public debts are internalized. But as a full internalization through the market seldom succeeds, rising debts have to be battled with regulation as well. We therefore call for combining two strategies: the intensification of competition, to enhance internalization of negative externalities, and a ban of debt covered investments, to limit the usage of public debt and break the structural dilemma imposed on politicians.

Date: 2008
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DOI: 10.1515/ordo-2008-0106

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