IMBALANCE

Joe Bakewell.

IMBALANCE.

Our politicians and media have been successful in concentrating our attention on the combative side of every issue and ‘news’ item. Ignored is a fundamental issue of imbalance in our use of resources.

Pretend that all of our programs and efforts, both public and private, are good, well intended, and needed, and that our real problem is an insufficient supply of wealth allocated to fund them. (Wealth is here defined as that which can be set aside for the future purchase of goods and services.)

Raise taxes, you say? Great, but what happens if we coincidently reduce the wealth available, creating an imbalance in the opposite direction? It’s important to recognize that most wealth is not stored under the mattress or used to purchase yachts but is invested in enterprises that employ people and pay taxes. Clearly, managing the balance is vital.

Here’s a real-life example of the difficulty involved: My town, Boxford, is known for high taxes and an excellent school system; parents move here as an economic alternative to paying for private schools. While here, they vote for every expenditure that will benefit their kids, but after graduations, they move out, leaving homeowners with no children to pay high taxes and a yet unfunded town employee retirement benefit commitment. During the next recession, this could get interesting.

Meanwhile, on a national basis, the issue of imbalance remains unrecognized. We keep on borrowing and spending without constraint, and without any measurements of results per dollar spent—political nirvana. Apparently, we can keep this up as long as there are no constraints on our borrowing. The cost shows up as inflation; dollars are printed to fund the debt, leaving savers with less purchasing power. Folks thinking about retirement need to keep this in mind.

I vaguely remember solving some algebraic equations by setting one side equal to zero. To see the imbalance issue more clearly, we can assume a balanced budget, no borrowing allowed. We need to either raise taxes or reduce programs. Let’s assume a 50/50 split; we still need to cut/reduce some programs—but which ones? We don’t have a means in place to measure the effectiveness of programs. Experience tells us that any effort to measure effectiveness would quickly become a political quagmire. Left to my own devices, I’d balance the budget, forcing the bureaucrats to fight it out in public. Of course, that can’t happen, so we’re doomed to a future in which growing debt, the corruption of special interest money, and increasing inequality, bring our country ever closer to some kind of breakdown.

Under these circumstances, voting for the candidates of the same party you voted for last time seems rather pathetic. Unless, of course, she’s pledged to eliminate special interest corruption.

Joe Bakewell.

https://joebakewell.wordpress.com/