But we can pay some number of people like that. Consider an example Gary Manikow wrote about some time ago, lifeguards in his community can retire after ‘only’ 20 years on full salary. Well granted CA has year round beaches open so professional lifeguards, that seems pretty good….too good to maintain. But how many lifeguards make it the full 20 years? If only one out of three hundred do so, then no we aren’t ‘broke’ and even if we are it’s not being caused by retiring lifeguards.

It’s only a stupid point if someone’s trying to give the impression that such salaries are somehow typical. But I’ve no reason to believe anyone was doing that.

But they are, if you’re spending too much you have to cut where the *spending* is. A teacher with 25 yrs experience may be very expensive both in pay and pension, but if 50% of your teachers never clear 10 years then most of your salary budget won’t be going to such teachers hence the purpose of harping about them is to give an impression that the salaries are typical and to stroke a type of class warfare.

However, unless specific actions are taken, the U.S. government *is* obligated to incur certain debts in the future. Those are decisions that have already been made, so it is not unreasonable to treat them as projected obligations.

Look behind these projections. For example CBO projections assume that current spending in the Afghanistan war will simply continue as is *foreever*. In fact many deficit reduction proposals start out with an ‘easy’ half trillion to trillion in savings by just assuming that Afghanistan will wind down in 5 yrs or less. Social Securities projections are pretty reliable….we know pretty well how many 70 yr olds there will be in 2030 so just multiply that by the monthly SSI check to get spending on SSI for 70′s yr olds. Medicare projections, though, are hogwash. They look at how medical costs have grown over the last so many years (faster than most everything else) and assume that rate of growth will remain constant into the future.

But funny things happen when you insist on straight lining curves. Look at Medicare D. It was projected to cost a lot. Why? Because drug costs went up quickly in the 90′s. But it didn’t cost as much. Why? Because fewer new blockbuster drugs were discovered in the 2000′s and the expensive premium drugs of the 90′s started going generic. If someone told you in 1975 that in 25-35 years the average person would spend nearly $100 a month on TV (“how can that be? its free over the air!”) but be totally uninterested in long distance telephone service because almost everyone would have some type of ‘unlimited minutes’ plan and almost never have to buy printed checks from the bank because bill pay would make it typical to go through maybe two checks per year at most…..well they’d tell you you’re silly.

I’m not saying the projections don’t have a use….they do just as the 24 yr old puts money in his 401K because he ‘projects’ retirement at 65 (but he may die of cancer at 29!). But its important to understand at a very fundamental level the reality of those projections are less real than they appear

And unless you have some way of guaranteeing that the national “salary” will rise commensurate with our future obligations, I don’t see why it’s unreasonable to compare current GDP with future obligations.

The 500% figure isn’t assuming the national salary won’t rise, it’s looking at a single year (2004)! It’s like asking the 24 yr old to consider the $300,000 he will borrow in the next 20 years while at the same time assuming he will work only in his 24th year and then loose his job and never earn another dollar again!

However, unless specific actions are taken, the U.S. government *is* obligated to incur certain debts in the future. Those are decisions that have already been made, so it is not unreasonable to treat them as projected obligations. And unless you have some way of guaranteeing that the national “salary” will rise commensurate with our future obligations, I don’t see why it’s unreasonable to compare current GDP with future obligations.

It’s only a stupid point if someone’s trying to give the impression that such salaries are somehow typical. But I’ve no reason to believe anyone was doing that.

We don’t *generally* pay local and state government workers $100-$200 per hour, but we *do* pay some of them that. That’s the point.

Then its a stupid point, akin to saying some people who buy lottery tickets for $1 walk way with a $10M prize….how could the lottery system ever make money? Well yes but the cost of the lottery prizes has to be compared not just to what the few winners paid but what the millions of losing players paid.

Likewise stories about 20-year pensioners retiring on full pay for life have to be offset with the true average cost of the workforce.

I don’t mind having a little bit more accounting in economic discussions, but let’s get real accounting. For example, the figure that the US owes ’500% of GDP’ isn’t comparing our current actual debt to our actual GDP but our future projected obligations to our 2004 GDP. That’s roughly akin to taking a 24 yr old who makes $40,000 a year with a debt of $20,000 and telling him his current debt is 50% of income. So far so good. But then telling him when he’s 34 he’s going to borrow $200,000 to buy a house and by 54 he’s going to borrow another $100,000 to send his kids to college therefore his ‘future obligations’ are $300,000 which is 7500% his current income! Heavens! If you really think this is useful at the very least you should be comparing debt incurred over several decades to cumulative income earned over several decades.

Two things:

Economics, social science or real science?

Secondly, one of the most sobering and freeing lessons of adulthood: If you can’t afford it, you can’t have it. Simple.

Dblade — no economy can afford to pay unskilled workers a comfortable living wage, because their lack of skills insures that they’re not producing the value of a comfortable living wage. That fits right in with the point of the article — economic theories are nice, but when it comes down to it, if you’re paying more than you can afford for something, no matter how nice that something is, you go broke.