How to Balance the Budget

So, America has an enormous national debt. And I don't know of anyone who thinks it's a good thing. I also think most people believe that fixing it lies in the hands of those wacky congressmen - and certainly they exert a direct influence by setting the budget and taking out loans. But both parties know that they survive by handing out money - in token sums to the poor, in defense contracts to the rich, and in countless other ways. And so, as a practical matter, I am highly skeptical of a voluntary congressional deficit reduction.

But, does it really have to be their job?  If we are really put out by the national debt, I think we can go ahead and balance it ourselves.  Here's how.

1. Make more money.  If you make more money, you pay more taxes.  Even though rich people can actually get away with paying a relatively low rate - Mitt Romney only paid 15% on his earnings last year - they still pay, in terms of sheer volume of money, a lot more taxes than poorer people do.  15% of what Mitt Romney makes in a year is a great deal more than my entire income over the last ten years.  The rich pay for almost everything the federal government does.  There's some folks in Congress and the White House who want to boost the budget by taxing the rich more, but while they're arguing about it we could just as easily balance the budget if more of us became rich.  Two millionaires paying 15% each is just as much revenue for the nation as one millionaire paying 30%.  And, as they say, two millionaires are better than one.  If Americans made more money, we'd pay more taxes, and we'd be closer to balancing the budget.  As I understand it, that's essentially how Clinton balanced the budget - although some of the money we paid it off with flew away again with the dot-com bust.

2. Pay Social Security taxes, but never collect.  The baby boomers are going to retire in a minute here, and they didn't have nearly as many kids as their parents did, meaning that Social Security, Medicare, and Medicaid are about to go incredibly bankrupt.  Social Security, for anyone more than a decade or two from retirement, is, as I understand it, essentially a program whereby we temporarily finance the boomer generation's retirement at the expense of our own.  As a practical matter, I think we'll need to have our own savings on top of what we pay into the program, and not count on Social Security being anything like secure.  And if balancing the budget is your priority, then donating to Social Security and not asking for a return is one way of putting off that particular budget crisis by just a little bit longer.

I am, of course, being a little facetious here.  I hope that social security can be gently defused before it blows up in our faces, and I can think of a lot of things I'm glad I spend my time doing that definitely don't make me any money.  But it's just struck me recently that politicians like to take a great deal of credit for the economy and the budget, and I'm not sure they really deserve it.  I'm starting to like those folks who say things might be better if the government stopped intervening, but I'm also still hesitant to say that government bears the biggest blame for things like our recession.  I think we the people are the deciding factor.  In terms of economic policy, our most important votes are cast by our actions.  When we act to add value to the world, the economy is better off for it.  And as long as we have our priorities in line, I think we're better off for it as well.

Knowing when to jump - Part 2

I think my point can be illustrated with a simple example. In my opinion, the most solid branch of science is physics, and within physics, there are few things as practically useful as the laws of motion. As long as velocities are well below the speed of light and gravity isn't tearing holes in the time-space continuum, they are as well understood and as thoroughly proven as any piece of human knowledge in the sciences.

So now take a simple pendulum - a weight swinging back and forth with no forces acting on it except gravity - like a grandfather clock. This is a classic problem from almost all introductory physics classes, and with a little geometry and a straightforward application of Newton's laws, the problem can be described very precisely with a few equations. Make some very simple assumptions based on a relatively small swing length, and you can accurately predict the motion of a pendulum for essentially ... forever. And if you actually swing a pendulum - voila! It does what you expect it to. Even for large angles, you can figure it out with enough time and trigonometry (as Michael Bolton sings, "When love puts you through the fire/ When love puts you to the test / nothing heals a broken heart like time, love and trigonometry").

But here's where it gets interesting. It turns out that if you hang a second pendulum off the first, and give it a bit swing, the problem no longer has a nice solution. We can't write down a formula for it. If you have a computer, you can fake it pretty well, but you realize that it's extremely sensitive to the slightest difference in getting started - really small changes in the starting angle or speed can lead to absolutely ridiculous, off-the-chain differences in the behavior of the pendulum ... here's a good link if you want to check this out for yourself: http://www.myphysicslab.com/dbl_pendulum.html.  Pull it back and give it a big starting angle, and watch the craziness.

It's a good example of a larger principle: science is great at breaking stuff down into parts and explaining the parts really well, but when things start getting put together into systems, predictions break down.  Effects like this are the reason your weatherman always manages to be wrong when he tries to predict rain a week from now, even though we have huge amounts of data and experience in predicting the weather.

Similarly, modern medicine does a great job of analyzing individual parts of the body and elements of your health, but when you slap it all together into a human being, suddenly things aren't so clear.  That's part of the reason why there's a new diet out every year that works for some people, at least temporarily.  It's also a reason that some Chinese medicines produce results that we don't understand.  It's not that there's something magic going on - it's just that the system is way too big and complicated for us to understand precisely.  Holistic medicine takes a wild guess, and sometimes it works.  Scientific medicine doesn't do as much guessing, but that also means it just can't deal with systems of a certain complexity.

And now we come to economics.  Economics tries to put equations on the behavior of people.  This is like meteorologists trying to predict rain, except that all of the rain droplets are irrational free agents and one of them might be related to Chuck Norris.  Basically, there's a really good reason why it gets the 'social' disclaimer in front of its 'science'.  If physics can't predict the exact behavior of two pendulums, how can economics predict the behavior of two countries?

Now, don't get me wrong here.  I'm not saying we should throw up our hands and give up the study of money and history and psychology and statistics.  I think these tools give us valuable insights, and that they do gradually approach the truth about what's going on in the world, and they deserve our best efforts.  But what I am saying is that we're not there yet, and I don't see us getting there in my lifetime.  Economics won't be able to tell me who to vote for, or which political party actually knows how to fix the country, or a surefire way to make a million dollars.

But, on the other hand, I'm not going to sit around paralyzed - I only get one shot at this thing called life!  Yes, I don't know for sure what's right and what's wrong.  Yes, even my beloved sciences are all too often inadequate to answer the most important questions in my life.  Yes, all this uncertainty means I could be making huge and costly mistakes in the way I live, work, and vote.  But I think that being alive is itself a call to action.  I think we're put here to do things. When it comes down to it, sometimes you have to make up your mind and act on your best belief, because the rewards of doing the right thing outweigh the risks of going wrong.  Sometimes, you find that your path leads you off what looks like a cliff, but you can't go back, and you can't stand still.  In short, sometimes you need - to jump!

In a deep, fundamental way, life is a leap of faith.  And if I had to define wisdom, I think I would simply call it ...

Knowing when to jump. :)