The thing to consider about nations, when discussing their budgets, is that nations don't die. Nations change hands, or divide sometimes, but a nation isn't mortal. Its land mass and people continue on in one form or another.
So the frequently used analogy (in Barack Obama's address on the budget crisis this week, and by others on both sides of the debate) of personal or family debt as being similar to a government's budget is inadequate.
It's up there with, “Why, if I ran my business this way …” If a nation were run like a business, the first thing a manager would do is get rid of all the old people hanging around the lobby. And let's face it, babies are a total loss leader, when you could bring in pre-raised babies at a small fraction of the cost.
As an individual, my father can decide that he won't leave his children any debt when he dies, because he feels it's unethical to do so. In fact, that is what he has decided. Ever since I was a young child, both my parents have liked to explain to me that they were not going to leave me any debt. Everything was taken care of.
They couldn't drive to the hardware store together without telling me where the will was hidden. And they bought the cheapest prepaid funerals on the market – basically, their bodies will be donated to science, then the leftovers will be cremated and then the ashes will be scattered in the parking lot of a big-box store, but only when someone's going out that way anyway because gas is expensive.
My mother and father cannot get on a plane without shouting, “We love you! And if we die, don't let anyone convince you to fly the bodies home – it's a racket!” while waving happily from the departure gate.
My mother and father would kiss me goodnight at bedtime and tell me that there was no personal debt under the bed, and I appreciate this, but that's not how a country works. A country's debt can, in complete fairness, be passed along to its children, because that is exactly what happens to a country's assets.
An educated population, for example, is an asset to a country in a vast number of ways: Educated people earn more, so they pay more taxes. They tend to get sick less and go to prison less often and so they cost the state less money and, as study after study has shown, educated parents tend to raise educated children, and so education is a very solid long-term investment for a nation to make.
Every time a politician makes the seemingly sensible point that everyone makes sacrifices to live within their means and therefore so must governments (as politicians from Washington to Toronto have done this week), someone needs to point out that if individuals choose to sacrifice going to university, it would be mostly a bad choice.
And that while living within one's means is a noble goal, few people, and very few businesses, balance their budgets on a year-to-year basis. They have mortgages, for example, or loans taken out to expand investment, or because of unforeseen strife.
But then they also have assets. So debt is also investment.
It's easy to alarm people over a deficit. It's a high number and people are forever being told that it's theirs and their children's debt and specifically how much of it is theirs, per capita.
But no one ever tells them how much highway they own, per capita, or what section of the Grand Canyon is theirs. It's a very one-sided, frequently opportunistic way of expressing the situation.
The consequences of playing a game around the largely artificial debt ceiling are very real. This is politics triumphing over economics, but without the triumph.
Certainly it's ideal to balance the books by the end of one's lifetime. But unlike my father, who likes to point out to me that he'll die soon – my bank recently asked me if I wanted a brochure on how to talk to my parents about estate planning and I asked if it had any information about how to stop them, even for a few hours, because when I suggest visiting my parents, my children now say, “Really? But I've already seen The Addams Family” – America won't disappear for a long time to come.
