It's Not about "Saving the Middle Class" or the Rich Paying Their "Fair" Share... It's the Present American "Self" v. the Future American "Self"

When discussing the choices of our present selves in relation to the needs of our future selves, economists use the term 'time inconsistency' or 'dynamic inconsistency.'

When we're young, we have several different "selves" whose best interests we need to consider, including today's self, tomorrow's, next month's, next year's and in the final analysis, the wants and needs of our old age self.

Time inconsistency is exemplified when we opt for spending for the present at the expense of saving to provide for our future economic health and well being. We tend to choose immediacy and a bird in the hand over a bird in the bush. We all too often put off until tomorrow, acting as if it will never come, those things which we don't absolutely have to do today. Including saving for our older soon to be self.

It's apparently part of our human nature. Today's self takes priority over tomorrow's self, even though that's not generally smart of us when we act that way. That said, we all too often discount heavily what our 'future self' will need and take today's eat, drink and be merry road, for tomorrow may never come.

As former Redskins football coach George Allen  said, we act as if "the future is now."

But Coach Allen was wrong about that. In fact, We the People have been ignoring what that  proverbial bird in the bush has to offer for far too long.

As a society, the effects of "now living" have a terrible impact on the generations that end up getting stuck with the bill. And as oldsters we end up participating in an unintentional Ponzi type scheme where our older selves live off the labors of younger generations, aka our kids and grandkids. Think Social Security, Medicare and Medicaid's nursing home care.

As a result, we oldsters voted while younger to receive benefits for ourselves at the expense of the young.  But today the young can no longer afford to pay the bills we've left for them to pay on our behalf. Besides, there are more of us than them due to the baby boomers' retiring in record numbers, so there simply aren't enough workers to foot all our oldster bills and our oldster "needs."

This unintended but very real chain of generational dependency has to be broken, and introducing means testing would be an excellent way to begin the process. As would later retirement dates and longer working careers. And less "double dipping" in the public sector as well. Many other things to lessen the burden on working age families must take place, too, including reducing government spending and providing more MOM retention through lower taxes.

Carpe Diem Nation recounts the history of what used to be, but no longer is, a wonderful U.S. tradition embracing the 'slingshot" approach to life:

"Europeans who settled America gave their lives a slingshot shape. They pulled back so they could shoot forward. They volunteered to live in harsh conditions today so their descendants could live well for centuries. The pioneers who traveled West did the same thing. So has each generation of immigrants — sacrificing the present for the sake of the future.

This slingshot manner of life led to one of those true national clichés: that America is the nation of futurity, that Americans organize their lives around romantic visions of what is to be.

In 1775, Sam Adams confidently predicted that the scraggly little colonies would one day be the world’s most powerful nation. In 1800, Noah Webster projected that the U.S. would someday have 300 million citizens, and that a country that big should have its own dictionary.

In his novel, “Giants in the Earth,” Ole Rolvaag has a pioneering farmer give a visitor a tour of his land. The farmer describes his beautiful home and his large buildings. The visitor confesses that he can’t see them. That’s because they haven’t been built yet, the farmer acknowledges, but they already exist as reality in his mind. . . . 

Today, Americans have inverted this way of thinking. Instead of sacrificing the present for the sake of the future, Americans now sacrifice the future for the sake of the present.

Federal spending is the most obvious example. The federal government is a machine that takes money from future earners and spends it on health care for retirees. Entitlement spending hurts the young in two ways. It squeezes government investment programs that boost future growth. Second, the young will have to pay the money back. To cover current obligations, according to the International Monetary Fund, young people will have to pay 35 percent more taxes and receive 35 percent fewer benefits.

But government is not the only place you can see signs of this present-ism. . . .      

Banks can lend money in two ways. They can lend to fund investments or they can lend to fund real estate purchases and other consumption. In 1982, banks were lending out 80 cents for investments for every $1 they were lending for consumption. By 2011, they lent only 30 cents to fund investments for every $1 of consumption. . . . 

Increasingly, companies have to spend their money on retirees, not future growth. Last week, for example, Ford announced that it was spending $5 billion to shore up its pension program. That’s an amount nearly equal to Ford’s investments in factories, equipment and innovation.

Why have Americans lost their devotion to the future? Part of the answer must be cultural. The Great Depression and World War II forced Americans to live with 16 straight years of scarcity. In the years after the war, people decided they’d had enough. There was what one historian called a “renunciation of renunciation.” We’ve now had a few generations raised with this consumption mind-set. There’s less of a sense that life is a partnership among the dead, the living and the unborn, with obligations to those to come. . . . 

Americans are neglecting the future, but I bet they’re still in love with it."

Summing Up

The time has come for us oldsters to accept the fact that we have a great responsibility to future generations --- to once again embrace the "slingshot" approach to life in America.

It's also time to acknowledge that the government has no money other than what its taxpaying citizens and its lenders provide. And that lenders will require repayment of the loans, including interest, down the road.

Our renewed emphasis on the slingshot approach must begin with the oldsters looking squarely in the face of our entitlements and growing welfare society. The money to pay for those entitlements is coming from those working and those who will be working in the future.

We oldsters simply didn't set enough funds aside to pay for our "entitlements" in the elderly years, no matter what the government officials that we selected have legislatively "agreed" to pay us. Period.

Having the government borrowing or printing money to pay for our present consumption spending is a genuine disservice to the future well being of our kids and grandkids.

That's my take about "fairness" and the salvation of the "middle class."

And it's one you won't be hearing from the President or the rest of the "progressives" in Washington.

Neither will you likely be hearing it from the AARP, mainstream Republicans or even from Tea Party members.

But it doesn't make it any less true.

The mess has been made. Somebody has to clean it up.

And that somebody doing the cleaning won't be the penniless fictional "government" in Washington. That somebody will be We the People.

Thanks. Bob.