The crowding-out argument claims government borrowing starves private enterprise of capital

Evidence

In Niemeyer’s words: “Industry could not permanently prosper while the state was absorbing the greater part of investible savings” (T 176/21, fol. 26). In 1922, Blackett used the same terminology: “the fund of investible capital is reduced by the lending to the government of what might otherwise be lent to trade” (T 171/202, fol. 23). Here lies the crux of the crowdingout argument: the government is accused of diverting private savings from the investment market— money that would otherwise be invested in more productive private enterprises. — Clara E. Mattei, The Capital Order, 954

Categorization

• DEFINE: Names and defines the crowding-out argument in the Treasury’s own vocabulary.
• XREF: The crowding-out logic resurfaces in modern austerity rhetoric, e.g., Reagan-era supply-side and post-2010 fiscal consolidation debates. — connects to: Mill accepted government debt so long as borrowing did not crowd out private capital. — Mark Blyth, Austerity: The History of a Dangerous…, 311; Government borrowing crowds out private investment by competing for limited savings — Clara E. Mattei, The Capital Order: How Economists…, 1694

Broader Connections

• Government borrowing crowds out private investment by competing for limited savings #expands (0.95) — Clara E. Mattei, The Capital Order, 1694