By the Numbers: Sorting Out Equality when the Debt ExpandsBy: FireTag
As an insulin-dependent diabetic for more than 47 years, I’ve had to become far more familiar with numbers measuring my medical condition than I’d ever wanted. By my teenage years, I knew what glucose readings meant in regard to how soon and what I had to eat, or how much insulin I needed to inject, or how much I had to tank up with extra carbs before I played sports.
I made mistakes, of course, but when I was young, my body was relatively forgiving of such mistakes, at least in the short term. I still remember going to the local clinic for a fasting blood sugar test one Saturday morning. A few hours later my mother got an urgent call from the doctor warning that my blood sugar was 600% of “normal” and that he feared I was on the verge of diabetic coma. Me? I was outside playing baseball with my friends, none the worse for wear.
By young adulthood, my body wasn’t quite that forgiving, but its lack of forgiveness was suppressed into things going on at the cellular or tissue level. They didn’t show up in new external symptoms, in how my body “felt”, or in the numbers I was able to measure with the standard tests then available. So I continued living the way I had.
I wasn’t intentionally being reckless; I just didn’t have a proper sense of my physical limits, even if the experts knew what the numbers predicted about the future. I had a family to start and prepare their future security. I had callings in small congregations where there were far too few members or priesthood to fulfill standard “tables of organization”, and so required double-hatting. And I was busy in a career trying to save the environment while supplying energy, too.
But that meant a lot of intense nights at the office in order to meet government client deadlines, when I might not start home much before dawn. I’d sleep irregularly, eat irregularly from whatever fast food place was quickest, and could seldom worry about more than guessing from how I felt what my glucose levels were. Regular schedules and diets are essential to keeping diabetes complications from developing, and I felt torn between what I needed to be able to do to fulfill my moral responsibilities and purposes, and what my long-term health required. I kept telling myself that things had to change, but later.
By the time I’d had the disease for twenty years or so, complications were no longer ignorable, despite the nobility of my explanations/rationalizations. One by one, complications in eyesight, peripheral nerve sensitivity, kidney function, heart function, and central nervous system sleep apnea began to limit my capacity. I had to start prioritizing which responsibilities and goals were to be achieved first and which dreams might never be realized. (That’s a very human process for everyone, I know, but for me middle-age and the loss of a youthful sense of invulnerability came a little early.) You just can’t run blood glucose levels in imbalance indefinitely and not expect to pay the price.
To me, our political system has entered a new regime in which the nasty consequences of trying to run our government spending in perpetual imbalance with our government revenue for decades can not be ignored any longer. We are caught between our hopes for doing good things now and the dawning realization that our future capabilities to do good are being crippled, whether we like it or not. We know things have to change, but we keep thinking things can change later.
Reuters columnist James Pethokoukis noted, in a July 19 post:
“Three liberal think tanks recently devised budgets to put the U.S. government on a sustainable fiscal path through 2035. Their plans, collectively, called for Washington to collect an average of 23.6 percent of GDP vs. the post-World War II average of 18.5 percent. To put that in further perspective, the highest level of tax revenue that Uncle Sam has ever taken is 20.9 percent in 1944…Even worse, all those tax hikes would still fail to balance the budget. And when you move past 2035, taxes would almost certainly need to go even higher…No wonder Obama rejected his own debt commission last December. It would limit the tax and spending burden to 21 percent of GDP…Just look at Obama’s budget from last February. Over a decade, it never reduces spending to less than 23 percent of GDP and spending is actually higher at the end of the ten-year span than in the middle.”
The inability to lift revenue above 20.9% of GDP in the last two-thirds of a century, despite wide variations in tax rates, is illustrative of our looming difficulties unless we cut spending — even if good things are going to go undone, and good people are not going to be saved. Our debt is rising so rapidly that our great debt debate in the past weeks has only been about how much above $20 trillion our national debt will be by the end of this decade. And even that debate presumes there will not be another recession during the coming decade.
Business Week reported on a June 2011 CBO study that even keeping the debt to GNP ratio of the US to current down-grade-threatening levels throughout the lifetimes of our youngest children would require a combination of spending cuts or revenue increases from the CBO baseline during the next decade on the same order as the entire current debt — or roughly seven times what our government was barely able to negotiate in the debt ceiling crisis. That is how fast our debt disease is eating away at our economy.
Indeed, when the debt ceiling was raised on August 2, the Treasury immediately unwound more than $200 billion in “bookkeeping” borrowing internal to the government and shifted it to external government debt. As a result, the US debt to GDP ratio exceeded 100% for the first time since 1947. Forget about the US rating agencies like S&P; the Chinese rating agency apparently downgraded the US from A+ to A-.
Our moral economic calculus in the United States has been dominated for a generation by considerations of economic efficiency versus economic fairness within the United States. These positions have not always corresponded to the positions of individual parties even when economic issues were the most salient points of public debate — there are economic interests and political interests represented in both major parties — although the Democratic party has more recently become seen the “party of government” and the Republican party as the “party of business”. (Does the GE CEO whose company pays no Federal income tax, but also pushes Obama’s “green agenda” through GE’s media empire and serves as an economic advisor to the President, count as a Republican or a Democrat?) So perhaps it is best to represent the major players (see figure) as “entrepreneurs” who try to get the American public (C) to buy their goods and services, but differ in whether they wish to be paid primarily in economic (A) or political (B) currencies. Within that approximation, the argument for economic equality revolves around the duty to give preference to the marginalized, so that differences which may remain must be justified according to the benefits of such differences to the marginalized.
However, as the debt grew, we gradually reached the point where that three-element approximation of reality is a major distraction from seeing who’s being marginalized and why. Two other players gradually became important, because they are really the people who make the loans possible: the next generation of voters (D), who guarantee either through paying taxes, or through foregoing benefits or consumption, that loans will be repaid; and international capital flows (E) that determine the volume and interest rates of those loans. As the total debt has grown to approach the size of American GDP, a new set of interactions has become critical: financial resources flow from both D and E to the political elites (B), who trade them to voters (C) for further political power in the hope of clearly jumping above (A) in the pre-existing competition between them. If that jump succeeds (and capital flows have long dwarfed the size of national economies, so success is doubtful), the distribution of power between B and C is less equitable, not more.
Further, today’s largest foreign creditor is China. In fact, based on International Monetary Fund data, Mark Steyn reported:
“If the IMF is correct (a big if), China will be the planet’s No. 1 economy by 2016. That means whoever’s elected in November next year will be the last president of the United States to preside over the world’s dominant economic power… The world’s economic superpower not only will be a communist dictatorship with a largely peasant population and legal, political and cultural traditions as alien to its predecessors as possible, but, even more civilizationally startling, it will be, unlike the U.S., Britain and the Dutch and Italians before them, a country that doesn’t even use the Roman alphabet.”
Notice that the new world economic power will not be so because of its high standard of living, but because of the sheer mass of its population. It is not a post modern society, or even a modern society outside of the urban growth centers. It is a rapidly industrializing country that builds bullet trains, but wrecks them because their workers are still trying to master reading the signal systems, and builds ghost cities because the infrastructure doesn’t yet exist for people to occupy them.
When an Asian nation’s population is still industrializing, it is not going to spend its power supporting the social programs of better off nations in the West. Nor is there a compelling egalitarian argument for them to do so. Should they pay for college degrees for American children instead of college degrees for Chinese children? Should they support unemployment or retirement benefits for Americans and Europeans, or lift their own workers into a middle class? They may perhaps follow an “eat European economies first” strategy, but they will get around to charging much higher interest for the American economy as well. And that means that our children and grandchildren will pay for my generation’s consumption.
Again, the egalitarian argument for that transfer is questionable. The social programs which drive government spending are overwhelmingly tilted toward the elderly. As Robert Samuelson wrote in the Washington Post on July 28:
“While 70 percent of respondents in a Pew Research Center poll judged budget deficits a ‘major problem,’ 64 percent rejected higher Medicare premiums and 58 percent opposed gradual increases in Social Security’s retirement age.
“What sustains these contradictions is a mythology holding that, once people hit 65, most become poor. This justifies political dogma among Democrats that resists Social Security or Medicare cuts of even one dollar.
“But the premise is wrong. True, some elderly live hand-to-mouth; many more are comfortable, and some are wealthy. The Kaiser Family Foundation reports the following for Medicare beneficiaries in 2010: 25 percent had savings and retirement accounts averaging $207,000 or more; among homeowners (four-fifths of those 65 and older), three-quarters had equity in their houses averaging $132,000; about 25 percent had incomes exceeding $47,000 (that’s for individuals, and couples would be higher).
….” We have a generation of politicians cowed and controlled by AARP. We need to ask how much today’s programs constitute a genuine “safety net” to protect the vulnerable (which is good) and how much they simply subsidize retirees’ private pleasures.”
Now, I wouldn’t personally make a purely egalitarian moral argument for what’s the right thing to do. I suspect the reason that Darwinian competition is so ubiquitous in the biological, economic, and intellectual realms is that God actually thinks it’s one of His better tools. I would be working harder to increase the size of the pie before I worried about distributing the pieces more equally. And any egalitarian argument I would use would give heavier weight to non-material measures of equality — like equal freedom, equal rights to personal development, equal rights to political power, etc.
But for those who do base their moral world view on the importance of material egalitarianism, I would ask you to consider that the “goodness” of the policies you have championed has been OBE. Just as my physical body could not sustain the mission goals I’d set for it because of the long-term complications building up from an inherent functional imperfection, the American political system also has to adjust its notion of what is good. America can no longer just focus on how economically equitable things are within American society today. Concern for the marginalized can’t stop at the US border; that’s normally the moral argument made in debating US immigration law and its enforcement. Concern for the marginalized must extend to the state of the world we leave to generations yet unborn; that’s normally the moral argument of the environmental movement.
Accordingly, material egalitarians are left with no credible moral or practical argument for converting the wealth of Asia and Africa or the future wealth of America’s poor and middle class children to sustain the political patronage of today’s American political elites. Those who wish to provide more material egalitarianism within America must now lead by example instead of by digging in. They must be willing to “share the sacrifice” by sacrificing the political patronage that goes with getting to spend 24% or more of the US GDP indefinitely instead of getting to spend only 18% of the US GDP indefinitely. They made the promises that they can not keep without taking very un-egalitarian actions and it becomes blindness or hypocrisy to carry on trying to make still more promises while blaming their failures on everyone but themselves.