You are so right! We are broke and, worse, we don't know it!
Beyond the $25 trillion in scheduled debt there are unfunded liabilities north of $200 trillion. No economy can forever carry these burdens without a reckoning, a crash, a deflationary spiral, an inflationary spiral, stagflation. Take your pick.
I understand why Bill Gates with his billions does not believe we live in an economy of scarcity but it is not so obvious why we as a society do not know that we are broke or that we must operate with regard to scarcity.
We live in an age in which we borrow at will without apparent consequences. Normally borrowing would lead to inflation but because the United States is the world's premier military power, the world's reserve currency, the beneficiary of cheap goods coming out of China and the Third World, oil exporter, able to import dirt cheap labor across the Rio Grande, we have managed to postpone the inevitable inflation and keep the music playing.
Therefore, there are no apparent consequences to borrowing. If there are no downside risks to borrowing, we can live the high life until the music stops playing.
So when Bill Gates wants to divert tax dollars to one of his wonderful schemes, whether to build toilets in Africa or defeat global warming, he moves dollars around the table, or I should say around the globe, with the stroke of a keyboard and without observable consequences and no understanding.
In this artificial world the free market cannot work, it cannot allocate resources that are precious because they are scarce because we don't know they are scarce. When we want more, we simply borrow more.
Those who oppose these kinds of projects as "job creators " as Bill Gates is trying to do here are mindful of Milton Friedman's famous reference to the shopkeeper's broken window hypothetical in which the cost to repair a vandalized window was said to ripple through the economy enriching everyone from glass manufacturers to carpenters etc. But the conservative points out that the money used to replace the broken window was money that the shopkeeper does not now have to enlarge his business and perhaps hire new employees, causing his own ripple effect.
The argument is that when the government takes money out of the economy, even to pursue noble leftist dreams, it is taking money that the marketplace knows better where to invest for greater return.
The law of unintended consequences done by our own hands as invisible opportunity cost.
Gates is making an old-fashioned elitist argument that I first encountered when in college and assigned to write a review of The Affluent Society. The book animated the Kennedy administration and the Democrat party around 1962 saying that, because we put Chrome on cars rather than build hospitals we don't know how to allocate our money and therefore we should be taxed by a government that knows better how to spend our money.
It is easy for Bill Gates who found a way to amass billions of dollars to believe that he is smarter than everyone else. It may be true that he is smarter than any other individual but the problem is he is not smarter than the mass of consumers, investors, entrepreneurs. His trust in elites is a denial of democracy, a denial of the wisdom of the free market, and an Old Testament chance to play God.
