by Frank Turk
I admit this is not a very theologically-driven post this week.
Watch this video:
If you click over to youTube to scan the comments (which is, of course, usually like reading the restroom walls at a dilapidated bus station) you find that people there are afraid that the National Debt is too high to ever be repaid -- we're doomed.
OK: fair enough. I admit that I think the national debt is too high by a factor of about 100, and that if it was only $140 billion (you know: "only") I'd be somewhat unfazed by it because $140 billion is really only about 3 days float for a global operation doing all sorts of things, and it's healthy to have enough cash reserve to fend off three days of banking glitches. (and true enough: we could really be well-off to have three days cash on-hand for the same purpose)
Now, that said, is the analogy given by the good doctor Davies really all that sound? Some say, "no," because a government is really nothing like a household, and the way it spends money is not analogous to household spending. Meh -- I think that objection overlooks the way analogies work, and it's also a little thick when it comes to recognizing that a budget is a budget whether the budget pays for food and socks and internet access or it pays for tanks and roads and policemen and a court system and so on. The analogy is established to make the numbers into dollar avlues which we really deal with every day -- and to show that by scale, the problem is rather disastrous.
That is: if the government can be seen as a self-sustaining entity. And I think that's where this analogy actually goes off the rails.
See: the government is, instead, a service provider in the economy at large. Now, I'll grant a few things here: I didn't ask for, and don't really want, a lot of the services it provides. I think for all the good it does, the harm it does to (for example) families and economic liberty are pretty serious if not actually severe. But as a service provider, the question is only who has chartered it and do they have the resources to pay off the debit it has incurred.
Think about this with me for a second. The right analogy here is that our society -- our nation -- is the household, and the national debt is sort of like our mortgage. Right now it clocks at about 100% of our national income, and we have to ask ourselves, "is that too much for a mortgage?"
By comparison, in 2005 the average household mortgage was about $167,000 and the average household income was between $46,000 and $56,000 (the lower number being "households," and the higher number being "families"). For the sake of this comparison, if we take the higher number as the baseline for calculating the ratio of income-to-mortgage, the average mortgage was 2.982 times the average annual household income (it's 3.63 times if you use the lower income number). So most households -- even in this day and age when about 3-4% of homes go into foreclosure due to financial hardship -- carry a debt someplace north of 2.5 times their annual income and generally survive it.
But here, I admit, the analogy really does fall apart. For the mortgage holder, at the end of the mortgage term, they own an asset which will usually appreciate at the rate of inflation. For the United States as a nation, what we get is a larger debt every year with little or no assets to show for it and no headway after we pay billions in interest only against debt service. The come-back from the investment as a nation is practically nil versus the household buying a house over the long run. But my actual point here is sound enough: a debt even the double the size of one's current annual income can be paid back (with interest) if one is disciplined enough to actually pay it back on a schedule.
Thus: So what? My point is very simple: the US Government is not like a house that lives outside of its means. It is rather like a department of a larger operation which is running without a budget, leeching resources from other more necessary and more profitable operations. What the Government needs is not actually to be shut down but to be scaled back to the right size for what it ought to be doing -- rather than continually growing every time some new manager comes in with big ideas about all the new customers he can sell below cost to and then somehow "make it up on volume."
Let's not elect somebody who sees it otherwise this year -- either at the local level, the state level, or the national level in all races. I really don't care who you vote for as long as he or she understands that the Government is spending too much money, and that has to stop. Immediately. And they have to have a commitment to pay back what we owe right now because, on principle, borrowing money for things that aren't assets which cannot be resold and cannot generate a quantifiable return on investment is wasteful at best -- and a kind of stealing at worst.
Pray about that, and we'll be more theologicaly-minded next week.
I admit this is not a very theologically-driven post this week.
Watch this video:
If you click over to youTube to scan the comments (which is, of course, usually like reading the restroom walls at a dilapidated bus station) you find that people there are afraid that the National Debt is too high to ever be repaid -- we're doomed.
OK: fair enough. I admit that I think the national debt is too high by a factor of about 100, and that if it was only $140 billion (you know: "only") I'd be somewhat unfazed by it because $140 billion is really only about 3 days float for a global operation doing all sorts of things, and it's healthy to have enough cash reserve to fend off three days of banking glitches. (and true enough: we could really be well-off to have three days cash on-hand for the same purpose)
That is: if the government can be seen as a self-sustaining entity. And I think that's where this analogy actually goes off the rails.
See: the government is, instead, a service provider in the economy at large. Now, I'll grant a few things here: I didn't ask for, and don't really want, a lot of the services it provides. I think for all the good it does, the harm it does to (for example) families and economic liberty are pretty serious if not actually severe. But as a service provider, the question is only who has chartered it and do they have the resources to pay off the debit it has incurred.
Think about this with me for a second. The right analogy here is that our society -- our nation -- is the household, and the national debt is sort of like our mortgage. Right now it clocks at about 100% of our national income, and we have to ask ourselves, "is that too much for a mortgage?"
By comparison, in 2005 the average household mortgage was about $167,000 and the average household income was between $46,000 and $56,000 (the lower number being "households," and the higher number being "families"). For the sake of this comparison, if we take the higher number as the baseline for calculating the ratio of income-to-mortgage, the average mortgage was 2.982 times the average annual household income (it's 3.63 times if you use the lower income number). So most households -- even in this day and age when about 3-4% of homes go into foreclosure due to financial hardship -- carry a debt someplace north of 2.5 times their annual income and generally survive it.
But here, I admit, the analogy really does fall apart. For the mortgage holder, at the end of the mortgage term, they own an asset which will usually appreciate at the rate of inflation. For the United States as a nation, what we get is a larger debt every year with little or no assets to show for it and no headway after we pay billions in interest only against debt service. The come-back from the investment as a nation is practically nil versus the household buying a house over the long run. But my actual point here is sound enough: a debt even the double the size of one's current annual income can be paid back (with interest) if one is disciplined enough to actually pay it back on a schedule.
Thus: So what? My point is very simple: the US Government is not like a house that lives outside of its means. It is rather like a department of a larger operation which is running without a budget, leeching resources from other more necessary and more profitable operations. What the Government needs is not actually to be shut down but to be scaled back to the right size for what it ought to be doing -- rather than continually growing every time some new manager comes in with big ideas about all the new customers he can sell below cost to and then somehow "make it up on volume."
Let's not elect somebody who sees it otherwise this year -- either at the local level, the state level, or the national level in all races. I really don't care who you vote for as long as he or she understands that the Government is spending too much money, and that has to stop. Immediately. And they have to have a commitment to pay back what we owe right now because, on principle, borrowing money for things that aren't assets which cannot be resold and cannot generate a quantifiable return on investment is wasteful at best -- and a kind of stealing at worst.
Pray about that, and we'll be more theologicaly-minded next week.
