Governments borrow – why?

This post is a plea for help from someone clever …. what I would like to understand concerns “the borrowing requirement”. All my adult life I have listened year after year to the British Chancellor’s presentation of his budget and each time there is reference to “the borrowing requirement”.

What I would like to know is WHY there is a borrowing “requirement” in the first place. Exactly WHY do governments spend more than they “earn”? And more to the point, why do – and can – they keep doing this year after year, decade after decade? Layman that I am, it seems to me that continually borrowing, living beyond one’s means, spending more than one receives is BOUND to lead to problems in the long run. Is it simply that in most western democracies the “long run” is not foremost in the minds of our leaders? Or does this continual borrowing not matter?

I was interested in the last French presidential election to see that  centrist candidate François Bayrou proposed making it illegal for the government to spend more than it received. I found this courageous and innovative. Naturally,

he came nowhere in the election! Silly chap! He should have promised to spend, spend, spend like the rest of them! Then he may have had a chance.

No, we are paying vast amounts of interest every year merely to service our debt. The basic questions are: Why can and do states do this? Is it necessary and is it wise? And if the answer to the last two questions is “No”, then why do we let them get away with it?

It seems to me that the “borrowing requirement” is simply a fairly crude means that governments use to bribe us with our own money. Please correct me if I am wrong!

By Chris Snuggs