Sunday, November 14, 2010

The Missing Element From the Policy Discussion over Deficit and Debt: Dynamic Transformation.

The New York Times this morning publishes an interactive graphic feature--a "puzzle," it calls it--on cutting the deficit.  It's a nifty little game you can play, but the problem is that the simulation doesn't begin to simulate all the possible solutions to the current deficit/debt conundrum.   Indeed, the Times actually excludes the most promising solutions.

And thus what the Times really accomplishes, with this puzzle, is to underscore the limitations of the current debate.  As we can note--see arrow above--all of the deficit reductions that the game-player can choose are supposed to come from either revenue increases or spending cuts.  This is completely static analysis--never satisfactory in a dynamic world.   No room in this little "puzzle" for either increasing economic growth or technological transformation.  

What if economic growth went up a point or two a year?  What if we cured Alzheimer's Disease and raised the retirement age?   Those possibilities, and a hundred others do not compute to the Times, nor to most of those conducting the debate.

And so we can add something else that is missing from the debate: Hope.  It feels sometimes, as if we are back in the 1970s.

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