Saturday, February 26, 2011

70 Year Old Dog Food

Optimal Economic Growth

In the past few days I have read several commentaries on USA Inc, a non-partisan report that looks at the U.S. federal government (and its financials) as if it were a business.  It is a very thorough report consisting of 266 pages which “examines the country’s income statement and balance sheet, aiming to interpret the underlying data and facts”.  The report also analyzes “the drivers of federal revenue and the history of expense growth, and discusses basic scenarios for how revenue and expense growth might change to help America move toward positive cash flow”.

If you feel you’re not quite up to reading 266 pages of hypothetical statistical analysis, you may want to read “Can America Function More Like a Fiscally Responsible Company? It’s up to Us, the Shareholders” by Sarah Lacy.  She points out in her analysis of USA Inc. that Medicare and Medicaid are the biggest culprits for why our financial situation is so untenable. Thanks largely to these unfunded entitlement programs our cash flow is negative $1.3 trillion, or about $11,000 per household.  Ms. Lacy also points out that 80% of Americans indicate balancing the budget should be a top priority, but only 12% support cutting spending on Medicare and Social Security– two of the biggest reasons our financial situation is so untenable.  In other words, America’s “shareholders” agree on the “company’s” ailments but are not willing to accept the “corporate cure”.

Matthew Yglesias on his blog “Think Progress” suggests there’s really a deeper issue here. “A state is fundamentally an ethical enterprise aimed at promoting human welfare. A business isn’t like that. If you’re trying to look at America from a balance-sheet perspective the problem is very clear. It’s not ‘entitlements’ and it’s not ‘Social Security’ and it’s not ‘Medicare’ and it’s not ‘health care costs’, it’s the existence of old people’. Old people, generally speaking, don’t produce anything of economic value. They sit around, retired, consuming goods and services and produce nothing but the occasional turn at babysitting. The optimal economic growth policy isn’t to slash Social Security or Medicare benefits, it’s to euthanize 70 year-olds and harvest their organs for auction. With that in place, you could cut taxes and massively ramp-up investments in physical infrastructure, early childhood education, and be on easy street. The problem with this isn’t that it wouldn’t work.  It’s that it would be morally wrong.

I hate to say it (I’m a senior citizen), but I think Mr. Yglesias is on to something here.  Because of our ever increasing national debt, our country's economy will sooner rather than later collapse and we need to take drastic action immediately.  Why not take the idea of euthanizing 70 year-olds and harvesting their organs for auction a step further.  We could grind up the remaining body parts, mix them all together and make dog food.  We could then sell it and use the profits to pay down the national debt.

The biggest problem however, is finding someone who will implement this idea and others like it, and actually run this country like a business and not let morality get in the way of a profitable business strategy.  And we don’t need any more spineless politicians.  We need a hard nosed, uncompromising, ruthless, corporate megalomaniac CEO who can get beyond minor moral issues and implement an effective and profitable dog food business.

Anyone watched "The Apprentice" lately?


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