Sam's First Credit Card

Barbara, 39, has three children. He eldest, Sam, now turning 16, has gotten his first drivers license. For his birthday, his Uncle Bill has given him an old beater to drive around. Barb wants Sam to help run errands like buying groceries, so she gives him as a birthday gift, a credit card. Now, Barb is a very strict parent, and she wants to make sure that he does not overspend. To that end, she gives him a very strict budget. She tells him to spend this much on food for himself, this much on clothing, this much on school supplies, etc. She also tells him to buy groceries for the family and some other things they need, as well as a few personal items for herself. She promises to pay for all of this. Now, the end of the first month comes, and the credit card bill is a shocker. Sam’s run up a huge charge, into the thousands! Barbara confronts him. He pulls out his Excel spreadsheet, nicely formatted and accurate. It shows that he only spent what his mother told him to spend, to the dollar, and the majority of the expense were for things he bought for the family. Unphased, Barb demands that he gets his spending under control. She tells him that if the charge is as high next month, she will not pay for it. He asks what he should stop spending money on, and she says that he should stop spending so much money going to the movies with friends and buying clothes he doesn't need. The end of the second month comes. The bill is again a shocker; in fact, it is three times as high as last month! Furious, Barb storm into his room. She demands that he explain himself. He pulls up the spreadsheet again. “This month,” he explains, “I only bought the cheapest lunch available at the school cafeteria, every day. I did not buy any new clothes and never went to the movies. I also earned some money. Remember when I helped Mrs Bimble with her computer problems? She gave me $40 for that.” “So that’s what that $60 from the electronics store was for?” Barb shouts, spitting in anger. “Yes, but Mrs Bimble paid me $100, so I came out $40 ahead,” he says back, trying to keep his voice down.

“I don’t want any excuses Sam. Why did you spend so much this month?” “I spent much less this month than last month,” he retorts, gritting his teeth but not matching Barbara’s rage. “I only spent what you told me to. Most of the spending was for the family. And most of the credit card bill is carried over from last month, since you forgot to pay.” Indeed his math checks out. But Barb doesn't care. She screams that she’ll call the bank, cancel the card, and he’ll have to go hungry at lunch time. She warns him that a bad credit rating will follow him forever. She threatens fire and brimstone, but when he asks, meekly, if she can at least pay him back for all the groceries, she shouts, “NO!” --- In case it wasn't already obvious, the credit card is the debt ceiling. Sam is the Obama administration, and Barbara represents those in congress who are now threatening to not raise the debt ceiling as a budget negotiation tactic. The groceries are major government spending like medicare and defense, while Sam’s lunch and clothing are minor programs like PBS and NASA. The work for Mrs Bimble represents certain ways in which the government can easily profit from spending, which tend to get cut anyway when budget hawks are on a rampage. Threatening to not raise the debt ceiling does not bring our spending under control, just like demanding that Sam pay for groceries but not paying the credit card bill does not do Sam and favors. In fact, Barbara is ruining Sam’s credit rating. In the same way, the threat of the debt ceiling only ruins our credit rating, which puts us in a worse place. In fact, the threat actually causes the exact problem that it is attempting to solve: America will only be unable to borrow more money when creditors believe we are unfit to pay; and such legislative budget fights are exactly what makes us look unfit to pay. Nobody is against balancing the budget and getting our spending under control. Nobody wants to have to pay a huge credit card bill years down the road. But it is not easy. We are in a triple bind as a country: we don’t want to raise taxes, we don’t want to cut large government programs like medicare and defense, and we don’t want to run up a huge debt. Each aspect of this problem touches different interest groups, and they will all fight to the death to get their way. Along the way, small but excellent government programs get lost. These programs, which are less than 20% of budget, and some of which can actually save us money in the long run, are used as token gestures; congressmen can brag that they saved $6 million by not funding a bridge, or $9 million by not funding a research program. These are pennies in a $3.6 trillion dollar budget. A few million here and there literally makes up less than one one-hundred-thousandth of the budget. Bickering over these minor expenses is a waste of time. All I ask is that we bring some sanity back to the budget process. All I ask is that we not blame the Obama administration for a problem that has been decades in the making. All I ask is that we not destroy our future trying to save it.

The Game We are Forced to Play

I have a very different view on how societies and economies should be structured.  I'd like to talk about the basis of my reasoning.

First, I want to talk about what I see as the typical American concept of wealth, so you can understand where I disagree.  The standard reasoning is as follows: You do work, that work creates wealth, and that wealth immediately belongs to you.  This view is tempered with a major caveat: you are obligated to pay a reasonable tithe, a tax, to support society.

I do not think that the creation of wealth immediately results in your ownership of that wealth.  This view is particularly flawed when we consider that nothing in this world is really completely original.  Even if I make a chair from wood, I still have taken that wood from my environment.  Ultimately there is a limited amount of wood in the world, and if everyone wanted to make chairs, we would find ourselves short of trees.  By making a chair, I am taking the right to make a chair from someone else. 

In the modern economy, the concept of creation and ownership are even more tenuous.  With regards to creation, no one is a lone actor; we assemble and create companies and markets from that which already exists.   Whatever your chosen line of work, it would not be profitable without your interaction with other people, and in that behavior you potentially take resources away from other people. 

With regards to ownership, you owe everything to society.  The government defends your property rights.  Other people assign your creations value, and you store that value in currency and investments which only have meaning in the context of global finance.  The idea that ownership is a solitary act is ridiculous.

In light of this, I find extremely dubious the arguments that taxation is theft or that regulation of economic behavior is an abridgment of freedom.  I agree that some specific neo-liberal or socialist approaches are probably not effective.  This does not justify out-of-hand rejection of all progressivism. 

Our economy is deliberately constructed as a game to encourage useful employment, and your income is the points you achieve by playing well.  Wealth is given to reward useful economic behavior   I do not advocate giving delinquents the same income and lifestyle and productive members of society; clearly, if we did that, no one would be interested in working. Given this, I acknowledge the justification for the game’s existence.  However, I don’t see any justification for making the game any more onerous than absolutely necessary. 

If we pay people to encourage them to work, why is the desire to work not a guarantee that you can support yourself?  In this time of high unemployment, those of us lucky to be employed are surrounded by people who would happily do any work in order to be independent from their parents, their creditors, or welfare.  Yet we blame them, and not society, for their inability to win this ridiculous game.

Generally, societies are constructed around a goal.  By default, this goal is the ultimate success of the society itself, to the detriment of the people who make it up.  This is insane.  Totalitarianism can be very successful, but we would hardly consider that success to be a worthy goal. A rights-respecting society would make its goal enabling each citizen to achieve their own goals, not the other way around.  Pure capitalism makes the assumption that the only meaningful goal of citizens is economic success.  Because economic success becomes the only measure of success, the society ultimately reverts to the trying to manage a single statistic, GDP, ignoring the pains of its citizens.

Economics is a game, a game with winners, losers, and unwilling participants.  You may want to play that game, but I don’t.  Because of the nature of capitalism, I am forced to play, and I don’t particularly enjoy it.  The objective of the society should be to keep the wheels of the economic spinning well enough that everyone -- EVERYONE -- can play the game they want to play.