Tuesday, April 27, 2010

Thrift, RIP - Time for a Resurrection

I just finished reading Phillip Longman's The Return of Thrift (Free Press), which - despite its age (or rather, perhaps because of its age) - remains very current.  Published in 1996, the book provides a detailed analysis of the impending entitlement and debt crisis.  What makes the work so poignent today is that the problems he identified - huge deficits, growing medicare and medicaid liabilities, the impending insolvency of social security, and related fiscal issues - remain seemingly intractable problems.

Although one could seriously debate his proposed solutions (and no one reading this should assume that this post is an endorsment of all of Longman's policy solutions), it does an excellent job reviewing the origin of many of our entitlement issues and poses almost insurmountable evidence that our entitlement schemes are unsustainable in the coming decades.    Indeed, with half-trillion dollar deficits for next decade, one would be hard pressed to ignore the crisis today.  

Although our Founding Fathers were somewhat split about the desirability of debt (Hamilton supported its unifying effect on the country and its ability to transform our country into a commercial giant, while Jefferson hated it with a passion), there is little question that our current state of affairs would cause considerable concern about the long term well-being of the nation.  Huge debts have been the bane of stability, consumer confidence, and living standards worldwide - it has even propelled some countries into revolution (think of France, circa 1789) - we are fools to think that we are immune to these pressures.  With each passing day this crisis expands; the time to address it is now.

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