Ramblings on Government Debt-Are we in need of a paradigm shift?

The governmental budget has always been an important part of public discussion. After the 1970’s and 80’s the amount of publically held debt rose from around 35% of GNP to almost 75% of GNP today. According to a new report by the Congressional Budget Office that debt will exceed 100% of GNP in 25 years. Growing debt and lack of sustainable fixes might be one problem related to not having a paradigm shift on institutions and spending. 

Government has a responsibility to use money wisely in order to enhance the lives of people and encourage the longevity of fundamental American values. When institutions take on an existence of their own and fail to change, they also neglect meeting their fiduciary responsibilities to the American public. Each wasted dollar is a dollar that can’t be used for the greater good of the nation. 

The growing deficit should be a concern for all Americans as our and our children’s livelihoods rest on the ability to ensure government is sustainable and accountable long into the future. Each generation has its own challenge and leaves a legacy for the next generation. Our legacy is one that carries the weight of unsustainable spending for the last 40 years that may very well impact the next 40 years.

Without fundamental changes in the way we think this debt will rear its ugly head in the future bursting pension funds, raising interest rates, collapsing municipalities, high student loans, drowning state budgets and leaving the lives of people shattered.  Public perception of government will change based upon its ability to reign in the monster sleeping under our beds. 

There are fundamental differences in perception of those who receive direct benefit from government spending and those who do not. Organizations that enjoy the financial benefits of large government spending through contracts, grants, wages, and resources have a vested interest in ensuring that government continues to spend and spend big.  Those closest to government have little incentive to change it.

Those outside of government may view spending as excessive and want justifications for government programs. Running a deficit year after year without attempting to change seems antithetical to growth and development. More spending means the next generation will have to pick up the slack where we left off. One has to wonder where the “buck stops here” in this mass dispersion of responsibility. 

The problem isn’t that anyone is trying to waste money but that people do not understand the consequences of improper resource allocation.  Without net positive of government functions the system will continue to amass large amounts of debt making it more difficult to operate, adjust, and be effective in the future. When financial resources are needed to avert disaster they won’t be there without the risk of default. 

To solve budgeting problems requires a fundamental paradigm shift about why these institutions have developed and the need to keep them updated for efficient effectiveness.  Money should not be flowing without some gauge of the institutions performance. When programs don’t work they need either a major overhaul or should be discarded as a drag on society.  Tough choices many politicians are not willing to make because the stakes on their careers from special interests are too high.

Government spending comes with responsibilities that include evaluating that programs are meeting their objectives; ensuring evidence is supporting these programs, and they are updated to reduce the drag on society. When money is used wisely that money can be used to reduce debt or focus on other important aspects of national growth.  Being in an elected position comes with responsibilities to a wider group of stakeholders. That requires thinking beyond the short-term to something more sustainable.  

https://www.cbo.gov/

Treaties that Foster Economic Growth and American Values

Treaties determine what type of international commercial activity is likely within a country. The design of these treaties can determine the access to raw materials, investment opportunities, and export opportunities. Countries like the U.S. can develop stronger treaties that are more advantageous to an export market while ensuring that American values are important to partnering countries.

Developing countries are regularly looking to attract investment. Investment money is used to fuel their economies, fill government coffers, and create a connection to a larger world. Because of America’s strong economic position it has the capacity to create more advantageous treaties (Chikere Azubuike, 2013). The value of these investments puts the U.S. in a better bargaining position than the other country(s).

This position of power is not necessarily a bad thing. When done well it can help the U.S. fuel its economic hubs for greater development. Such hubs rely on natural resources and international supplies to fuel new product development and manufacturing. Ensuring that treaties consider the needs of these Hubs helps create jobs and encourage higher levels of local economic activity.

As with all negotiations the position of power often determines the terms and agreements of the two parties. Having an advantage in negotiation can help ensure that the right pressure points are being used that determine the outcome of negotiations. That power can help U.S. located firms obtain the resourced they need to grow and create jobs in the local economy.

Treaties are not all about economics and resource obtainment. Treaties can also promote human rights and values (Choudhury, 2009). In this case, solid treaties can also help ensure that American values are considered in business dealings. Such legal frameworks help orientate supplier nations to U.S. interests and perspectives which can further the spread of fundamental American values.

The development of strong American treaties that help turn bi-lateral trade agreements into a wider multi-lateral framework to ensure the anchoring of resources to economic hubs can help foster American interests. Each supplier nation is provided access to sell supplies to the U.S. while obtaining investments into the development of those supplies. The end result is a more efficient and well-developed economic hub that can obtain resources at a lower cost.

Chikere Azubuike, E. (2013). The place of treaties in international investment. Annual Survey of International & Comparative Law, 19.

Choudhury, B. (2009). Democratic implications arising from the intersection of investment arbitration and human rights. Alberta Law Review, 46 (4).