Sunday, January 6, 2013
Happy New Year: resolutions, debt, politics
When we don’t care enough about the future, we eat too much, exercise too little, borrow too heavily, smoke, and forget to floss. Although these behaviors seem to make us happy, most of us realize that when the future finally gets here, we will be dealing with some serious remorse.
To prevent such inter-temporal disappointment, we find ways to let our future selves take control of our current behavior. For me, it is writing down what I hope to accomplish during the day on a note card. For some reason, my future self is awake at the beginning of the day, and the note card is a way of telling my day self to stay on task. For others, it is cutting up credit cards, drinking Prosecco (only 9% alcohol), marrying your personal trainer, or letting a “friend” coach your fantasy football team. All of these devices let our future selves take control of our current behavior, to do things that would otherwise be left undone.
Similarly, a year ago, our then-future politicians designed the fiscal cliff to stop their day selves from piling up debt. However, on January 1, when the future became the present, President Obama and Congress duped their future selves. If our politicians don’t find a way to hold their day selves accountable, the markets eventually will, and remorse won’t begin to describe the future we are passing on to our kids. The debt ceiling is another device to let their future selves take control. But based on what just happened, my expectations are low.
Happy New Year.
 “The American Republic will endure until the day Congress discovers that it can bribe the public with the public's money.” ― Alexis de Tocqueville.
 If you add our current debt (about 100% of our income) to our unfunded liabilities (about 400% of our income, depending on assumptions), you see how deep we are in it. Countries are thought to be in serious trouble when their debt reaches 100% of income.