Transformations  in
Business & Economics

The Ethical Implications of US Deficit Spending: An Ethical Examination of US Government Budget and Tax Policies… Why Ethics Matters
William T. Bagatelas

ABSTRACT. Are ethical considerations a priority or even necessary regarding economic policy and its related ethical performance. Ethical determinations by governments regarding how and when to enhance or limit economic operations in a given setting, is usually conducted within the context of larger macro-oriented realities. Issues like the rapidly growing importance of international taxation and its impact on business location, investment and government tax revenue and other long-term priorities, are rapidly growing in importance as more and more governments carry out tax and spending/deficit policies, reflecting the growing pressure to pursue those policies, and which “reward” low tax policies, though perhaps in a non-ethical way, for much or most of a country’s population. Business and economic policy, by simply reacting to these given externalities, normally assumes its decision-making process is non-applicable in ethical terms concerning macro-oriented events. Nothing could be further from the truth.

In short, should economic policy be conducted within an existing framework, which is ethically incompatible with acceptable living standards for local, regional and national populations? Whether or not taxation or other topics is a related issue, it clearly is, ethics is most assuredly finding more importance in the minds of government, business and corporate leaders worldwide, as poverty rates throughout the third world continue to grow. The growing effects of government debt and deficits on economic and business performance in the US and other industrial countries, and the growing realization that an ethical debate must take place regarding the nature and long-term impact of deficit spending on macro-oriented policies, is forcing ethics to the surface regarding current and future debates on deficit spending. Ethics, as governments are learning, clearly matters.

KEYWORDS: deficit spending, ethics, government budget, taxation policy, the USA.

JEL classification: G18, H5, H6, O51.