Maybe it’s just me, but do you feel as if over the past few days there’s been a palpable (and most welcome) swing in public sentiment on the twin issues facing the United States – the ceiling on the national debt, and structural flaws with our fiscal policy?
[Economists tell us that our national debt is too large compared with our GDP. Unless we act, the debt will continue to rise, in part because of structural problems in entitlements, notably social security, Medicare and Medicaid, and in part because of our (natural enough!) aversion to taxation. Tinkering with the so-called discretionary part of the federal budget, which includes weather services, etc., will not solve our problem.]
If this sea change is indeed underway, we have our political leadership to thank, on both sides of the aisle. A little give on each side, a subtle change in the tone and substance of those evening press conferences? Together they’ve gone a long way to shift our national mindset.
Especially when we’ve known all along that these steps were needed. For decades, analysts of every stripe have been warning of troubles to come, and with the passing of each year, the warnings have grown more dire. However, to speak aloud of these brewing troubles, to concede their reality and import, has until now appeared to be political suicide. Jimmy Carter, and then four years later, Walter Mondale, were early casualties. Examples at the state and local level abound. For decades it has seemed that the winning political strategy, the recipe for getting elected, has been this:
Look the American people (that is, you and me) in the eye. Tell them (that is, us): “You’re living in a fantasy world!” Make sure that sinks in. Then say, “And I can keep the fantasy going four years longer than my opponent!” If that’s not enough, repeat: “My opponent will force you to face reality today. But elect me, and we can go on just as we’ve been for another four years.”
By contrast, as the drop-dead date of July 22 nears, when we must act in order to head off default in August, it suddenly seems we’re all living on the real world.
Want to know more? Have a little time on your hands? Most newspapers are devoting a lot of ink to the subject. Read up. The topic’s headline news on all the news channels [unless you count Casey Anthony]. Online, you might check out the bi-partisan, non-profit Committee for a Responsible Federal Budget, founded by Peter Peterson, a former U.S. Secretary of Commerce. Worth a look!
Real-world thinking and action? Long overdue.
With progress in the air, and with so much hanging in the balance, and the balance so fragile, maybe now is not the time to bring up yet another challenge we face – one that may carry a similarly big price tag, one threatening similarly wrenching consequences for every one of us. But this is a teachable moment, and perhaps we ought to seize it.
The issue? Imprecisely-known but nonetheless substantial subsidies and unaddressed externalities swirling around every resource that matters to us. Water, food, energy. Renewable and non-renewable resources. We subsidize the use of water for agriculture, allowing water-intensive crops such as cotton to be grown in semi-arid regions. We mine fossil water from deep aquifers at rates faster than replacement – rates that are accelerating – paying little or no mind to what will happen when these sources are depleted. We subsidize the growth of grain, and we subsidize again its use to make ethanol. We use the ethanol to drive our cars and trucks, trumpeting its use as renewable, when its carbon cost is just about the same as burning gasoline. Along the way, we cause food prices, malnourishment, and political unrest to spike around the world. We extract minerals from the earth while failing to take account the decline in the resources in our economic statistics, and while degrading air, soil, and water quality in the process. Such subsidies and externalities pervade every aspect of our economic activity. We’ve conned ourselves into thinking we’re much better off than we really are.
Big. Complicated. Pervasive. Expensive. Raising questions not only about costs but also who pays. In these respects the resource problem and the fiscal problem share similarities.
But the resource and environmental problems differ from the fiscal counterparts in at least three important ways.
First, we have no idea how serious they are or how much time we have. With regard to the federal budget structural difficulties it was possible to make accurate estimates of the dollar amounts involved, the rate of debt buildup, etc., and when these trends become unsustainable. By contrast, the extent and nature of the resource and environmental subsidies have been only poorly and sporadically documented, and exhibit huge uncertainties.
Second, when it comes to the fiscal problems, the options for policy fixes can readily be listed. Their costs and benefits, and their social consequences are uncertain, but can be stated, compared, and debated. When it comes to resource issues and the environment, alternatives to conventional practice are few and far between, their potential benefits and unintended consequences murkier. In many cases, the best minds aren’t even sure solutions exist.
Third, fiscal policies vary quite a bit country by country and can largely be addressed individually (think, over the past decade or so, of Sweden, Argentina, Iceland, Greece…). But when it comes to resource and environmental issues in a global economy, the real world problems (e.g. carbon emissions) have to be treated holistically. [This distinction is a little more blurred than the first two, but you get the idea.]
Overwhelming. We might be forgiven for wanting four more years in a fantasy world.
But before we give in to lethargy and denial, we might note that there’s actually a fourth way the problems differ. The fiscal issues, at best, occasionally yield a bit to some policy sleight-of-hand. But the resource and environmental issues actually respond nicely to scientific and technological advance. Substituting renewable for non-renewable resources. Recycling. Changing industrial processes and methods. Social change. There’s even profit in much of this.
[Henry Ford faced a similar challenge in the 1930’s. His model A and model T Fords had been innovative and made automobiles a way of life in the United States. But competitors were crowding in. And then the Depression hit. It would have been easy for him to throw up his hands and say, “Well,I had a good run. It was fun while it lasted.” Instead he used the Depression and the hard times as the occasion to retool. When the Depression and World War II ended, Ford was back on top.]
In the same way today, nations of the world could be making common cause to address resource and environmental challenges. Before the end of the 21st century, this will be the issue making the headlines, not any purely financial one. In fact, resource and fiscal issues are already interwoven; this will quickly grow more obvious over the next decade. Investments are needed: (1) in observations, science, and services on how the real world works, and (2) in science and technologies addressing resource extraction and use, and environmental and ecosystem protection.
The fact of the matter? it would actually be more painful to repeat the mistake we’ve been making all along with regard to our fiscal problems – continuing to shove them under the increasingly lumpy hard-to-ignore rug, repressing them to maintain our fantasy world.
Facing this truth will indeed set us free.