The source of degeneracy, which may be remarked in free governments, consists in the practice of contracting debt, and mortgaging the public revenues, by which taxes may, in time, become altogether intolerable, and all the property of the state be brought into the hands of the public. This practice is of modern date....Absolute princes have also contracted debt; but as an absolute prince may make a bankruptcy when he pleases, his people can never be oppressed by his debts. In popular governments, the people, and chiefly those who have the highest offices, being commonly the public creditors, it is difficult for the state to make use of this remedy, which, however it may sometimes be necessary, is always cruel and barbarous. This, therefore seems to be an inconvenience, which nearly threatens all free governments; especially our own, at the present juncture of affairs. And what a strong motive is this, to encrease our frugality of public money; lest for want of it, we be reduced, by the multiplicity of taxes, or what is worse, by our public impotence and inability for defence, to curse our very liberty, and wish ourselves in the same state of servitude with all the nations that surround us?
David Hume, "Of Civil Liberty". Hume worries about this elsewhere, as well, most notably in "Of Public Credit," where he makes the famous claim, "either the nation must destroy public credit, or public credit will destroy the nation." The passage there is quite interesting, and perhaps worth quoting in full.
I must confess, that there is a strange supineness, from long custom, creeped into all ranks of men, with regard to public debts, not unlike what divines so vehemently complain of with regard to their religious doctrines. We all own, that the most sanguine imagination cannot hope, either that this or any future ministry will be possessed of such rigid and steady frugality, as to make a considerable progress in the payment of our debts; or that the situation of foreign affairs will, for any long time, allow them leisure and tranquillity for such an undertaking.j What then is to become of us? Were we ever so good Christians, and ever so resigned to Providence; this, methinks, were a curious question, even considered as a speculative one, and what it might not be altogether impossible to form some conjectural solution of. The events here will depend little upon the contingencies of battles, negociations, intrigues, and factions. There seems to be a natural progress of things, which may guide our reasoning. As it would have required but a moderate share of prudence, when we first began this practice of mortgaging, to have foretold, from the nature of men and of ministers, that things would necessarily be carried to the length we see; so now, that they have at last happily reached it, it may not be difficult to guess at the consequences. It must, indeed, be one of these two events; either the nation must destroy public credit, or public credit will destroy the nation. It is impossible that they can both subsist, after the manner they have been hitherto managed, in this, as well as in some other countries.
I was reminded of this because Carl Wennerlind has an interesting article in the most recent Hume Studies, "The Role of Political Economy in Hume's Moral Philosophy." It is an important topic. In a sense, all the major thinkers of the Scottish Enlightenment saw philosophy as (we might say) civilization engineering, the design and production of civilized life. And the interest of David Hume and Adam Smith in political economy is very much an important part of this.
