Naked Economics: Undressing the Dismal Science pdfdrive com

part is that some of our most significant government expenses lie ahead as the
Baby Boomers retire and begin to claim Social Security and Medicare. The
“peace dividend” at the end of the Cold War lasted about 45 minutes, so we
seem stuck with large defense budgets for the foreseeable future. Math is math;
every reasonable calculation I’ve seen shows that our fiscal trajectory is
unsustainable.
So what will we do about it? U.S. society has developed not merely an
aversion to higher taxes, but a palpable hostility. That would be fine if we were
willing to trim government to a size that we could fund. But we haven’t done
that either.

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Think about what that means. Going forward, somehow we have to raise
enough revenue to (1) pay for whatever government we choose to have, which
we aren’t doing fully now; (2) pay the interest we’ve accumulated on past bills;
and (3) pay for the new expenses associated with an aging population and
expensive entitlement promises.
That’s going to require serious political leadership and recognition by
Americans that the status quo is not an option. Simon Johnson, who had plenty
of experience with financial crises as the former chief economist for the
International Monetary Fund, has noted, “Overborrowing always ends badly,
whether for an individual, a company, or a country.”
5
During the first decade of
the new millennium, three parties borrowed heavily: consumers, financial firms,
and the U.S. government. So far, two have paid a huge price for that leverage. Is
there another shoe to drop?
Those are just my questions. My hope is that by now you have more of your
own. The remarkable thing about economics is that once you’ve been exposed to
the big ideas, they begin to show up everywhere. The sad irony of Econ 101 is
that students too often suffer through dull, esoteric lectures while economics is
going on all around them. Economics offers insight into wealth, poverty, gender
relations, the environment, discrimination, politics—just to name a few of the
things we’ve touched upon. How could that possibly not be interesting?

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