Inspired by the outrage at Mitt Romney’s dismissal of the 47 percent of voters who pay no federal income tax, a friend of mine penned a piece of poetry, which he has kindly allowed me to share:

Obama’s formation was wildly left wing,

Which makes him rather a victim, poor thing.

With golf and speeches his days are spent — 

A telegenic member of the forty-seven percent.

Which prompts me to pose the question: Should people who pay no taxes have a say in how tax revenues are spent?

We Americans take for granted that everyone should be allowed to vote, but this is really a rather novel idea. It was only in the twentieth century that universal suffrage became the norm in democratic countries. It was also only in the twentieth century that deficit spending and chronic inflation became the norm in democratic countries. Yes, the two are very closely related.

When the electorates of the world were smaller and composed of people heavily invested in government bonds, the parliaments of the world were more careful with the public’s money. They borrowed money only for extraordinary purposes like war and made sure to pay it back as soon as they could. Why? Because most of the money was borrowed from wealthy members of the electorate and the government, who therefore had a vested interest in making sure the country remained sound enough economically to pay its debts.

In his book A Free Nation Deep in Debt (summarized by me here), James Macdonald explains that the symbiosis of public debtor and citizen-creditor gave democratic countries a decisive edge over monarchies, enabling them to borrow more money in times of war. Eighteenth-century Britain was just a third the size of France in population, but it out-spent France handily in both the Seven Years War (£73 million to £53 million) and the American Revolution (£112 million to £40 million). France could not spend more because it could not borrow more. Lenders didn’t trust the French king to pay his bills. On the eve of the French Revolution, France was bankrupt with public debt at just 65 percent of GNP, while Britain was carrying on business as usual with debt at 182 percent of GNP — down, in fact, from over 200 percent at the end of the American Revolution. In 1814, after more than a decade of war with Napoleon, Britain’s debt reached almost 300 percent of GNP, but by 1860 it was down to 100 percent, and by 1913 it stood at just 25 percent.

There were other benefits of a limited, well-invested electorate. From roughly 1600 to 1900, the British pound remained remarkably stable. Wages and prices rose predictably during wartime in response to increased demand and fell predictably upon the return of peace. Macdonald names monetary stability as one of the twin pillars of British credit in that time, the other being fiscal discipline — keeping peacetime expenses down and using budget surpluses to pay down debt. He writes:

In the eighteenth century it did not occur to the public creditors of Britain and the Dutch Republic that their governments might simply inflate away their problems. Such things did not happen in states “where the finances are absolutely governed by those who furnish them.”

That last phrase about finances being “absolutely governed by those who furnish them” is actually a slight paraphrase of an envious eighteenth-century Frenchman commenting favorably on the British system.

But whereas in 1814 almost all British voters were also creditors, by 1918 most were not. With the gradual expansion of the franchise to include all adult males in 1918, and then all adults in 1928, Parliament ceased to represent the law-and-order interests of creditors and began representing the demands of potential beneficiaries of peacetime social spending.

When wages and prices fell as usual after World War I, John Maynard Keynes was there to tell Parliament that its main economic objective should not be paying off creditors, but maintaining full employment with more public spending, made possible by high peacetime taxes and inflation of the money supply.

What came next were decades of deficit spending, routine borrowing, wartime rationing, and peacetime inflation. By the mid-century, the leading nations of the free world had undergone a fiscal revolution so complete that only the fossils among us could recognize how much things had changed. Macdonald quotes Sydney Homer, head of research for Salomon Brothers, telling an audience in Cleveland in 1974:

When I was a student in college, we were all taught that peacetime inflation was unthinkable in our great United States, or for that matter in any other first-class enlightened industrial state except perhaps France. Peacetime inflation was then to be found chiefly in banana republics with their pesos, escudos, and other queer-sounding currencies, and all they needed to save them from the disgrace of inflation was to obtain the monetary advice of any one of our distinguished economists and follow it. … Our [current] inflation is unprecedented in our economic history for times of peace. … What has happened to our stockpile of astute economists that used to lecture small South American countries on how to behave themselves fiscally? Indeed, a few of them are now telling us to emulate South American methods even though these often require a military dictatorship.

We’re not there yet, but we’re moving in that direction. Now some blue-state pols want to expand suffrage even further. It’s not enough that welfare dependents and teenagers can vote; they also want non-citizens to vote. A political science professor at Old Dominion University even labels alien voting an “emerging democratic norm.” Will it give us better government? The results are in, and the answer is no.