The Real Purpose of Public Spending: Survival
Governments Don’t Exist to Run a Surplus
It's all budgetary doom. Or at least that's how it feels. Extreme levels of debt. High taxes. Fat spending. Why don't they just fix it up? Seems normal to keep my house that way. Stay out of the red.
Let me start with a heresy: the chief objective of a state budget is not balance, surplus, nor even thrift.
It’s survival.
The treasurer doesn't just count money for the joy of symmetry. He has a boss. A superior who survives inside an institution. And that institution, like the budget, must maintain legitimacy, social order, and functional rule.
Look at the numbers. France, Italy, and the United Kingdom — all relatively pretty good creditors — now each carry public debts larger than their annual GDPs. They owe more than what the country makes in a year. It seems impossible. But history tells otherwise. What it shows is that the state often survives precisely because it borrows — to build, to defend, to pacify — and not in spite of it.
So, what’s the point of the state? Keeping the lights on? In Hobbes’ vision, the state exists to prevent civil war — the war of all against all. It’s a sentimental view. But the budget, then, is a sovereign instrument to preserve internal peace, not to hoard gold. Police, armies, roads. All these things that don't necessarily just impose force, but ensure peace.
Exist to persist.
This is why modern budgets are so often in deficit — not because leaders are ignorant (though some are), but because they are trying to prevent the fragile machinery of civil peace from seizing up entirely.
Consider Donald Trump, who while extolling the virtues of fiscal discipline with DOGE, was also signing into law one of the most bloated spending bills in US history. A joke, yes — but an interesting example. Even the populist with a Twitter trigger finger knew that starving the system was a quicker route to collapse than overfeeding it.
There’s an implicit agreement baked in a budget. I pay my tax, but I expect something in return. Citizens consent to taxation because they expect something in return: pensions, hospitals, police protection, roads. If a government begins hoarding surpluses while letting services decay, it becomes not a steward, but a warlord— extracting obedience without reciprocity.
But it's far worse once tax falls below the spending we expect. We still demandthe spending, and much of modern fiscal theory suggests that spending might even help more tax in future. But whatever your reasoning, the conclusion is the same: debt. It's what we use to fill the gap. It greases the machine. But what makes it so brutal is the dangerous corner it slowly builds.
It's incredibly hard to cut spending. Think of how austerity backfires. When Greece, under the supervision of the EU and IMF creditors, it tore its country apart. The books have improved since— but the country has suffered. Economic necrosis.
You might say that put themselves in that situation, but think of austerity on that scale in the UK or the US. Even done responsibly, imagine the costs.
Source: Trading Economics/Post Factum
Politicians must survive, and most of the time their survival depends on the persistence of the state. But they’re still short-sighted. You can justify the most ridiculous financial situations as long as it wins you an election. That’s the proof of power, right? And if you go through with it, the debt is for your successor, not you.
To rule by fear, you must pay the army. To rule by love, you must feed the people. And all this costs cash. And all of this guarantees the survival of the state as well as that of the leader. A wise prince uses wealth to buy time, loyalty, and order. It's part of the political negotiation.
But it creates a trap. The leader’s survival depends on the maintenance of spending, however unsustainable. But to cut it could destroy your power. It creates the incentive for a politician who pretends to be austere and conservative while enriching his allies and voters, with gifts and handouts.
And beware the bond market. Remember the Liz Truss budget. She took a punt on her budget, and once the financial pressure rose, she was binned like an old pear. This is the another reality to fiscal adventurism. So much of the financial discipline also depends on a government still having access to credit. To do so, and at cheap rates, you have to look like you can pay it back. This is a natural constraint which even the greatest fiscal profligates have been bound by. The state must live.
A budget surplus only matters when it helps the state survive.
So that’s the thought for the week. A budget isn’t made to balance — it’s made to hold things together. The state’s job is civil order. The budget is just a tool for that.
Not an end in itself, but a means to survival.