There's a Certain Freedom in Being Completely Screwed...

Public debt is a hot button these days.  Most people have the impression that they personally have to balance their budgets, and are mystified that our government does not.  This of course is a gross oversimplification and, frankly, an expression of economic illiteracy, but it is fairly universal.  And it is understandable, given that debt this large cannot be paid back without serious pain.  However, it needs to be placed in context.

The United States ranks 47th in the world in terms of size of our public debt as a percentage of our gross domestic product (GDP), with our national debt standing at 52.9% of what we produce as a nation every year.  Our debt is large, but our production is monumentally huge, globally speaking, so we do okay – there is room for improvement, certainly, but we are not in the same ballpark as some other countries noted as fiscal basketcases.

Greece is the example most often noted lately, because they have undertaken extreme austerity measures to get their debt under control – their national debt currently amounts to 113.4% of their GDP.  This is high enough to rank them as the 7th most debt-laden economy in the world, and their austerity measures to correct this debt have led to riots and full-scale social upheaval.

The worst debt-offender is Zimbabwe, a nation which has struggled under the radar with a quasi-socialist dictatorship (emphasis on dictator, as philosophy really has nothing to do with Mr. Mugabe’s stranglehold on power -- he plays "Robin Hood" as a sometimes brilliant advertising campaign), and is now paying – or not paying, as the case may be – for their fiscal mismanagement to the tune of a debt equalling 282.6% of their GDP.

Numbers 2 and 6 on the list might surprise most observers, however, whose economic news comes from the front page of USA Today.  The 2nd biggest share of debt belongs to Japan, a nation most Americans think of as an economic powerhouse.  Number 6 is Italy, a nation in constant turmoil economically and politically, though not in our consciousness as a “troubled” nation in any real sense.  They have enormous personal savings in place, which offsets their national debt; personal responsibility, in other words, stabilizes their nationally irresponsible spending habits.

In fact, most of the list of debtor standouts are not countries undergoing any kind of major upheaval:  Iceland at number 9, Belgium 11, France 15, Portugal 17, Canada 18, Austria 21, England/Great Britain 22, Netherlands 27, Norway 29, Brazil 30, Ireland 36, United Arab Emirates 42, and Spain 45 are all nations with significantly more debt than the United States, none of which are under any kind of eminent collapse threat, at least as compared to their fellow nations.  They are all feeling the pinch, but not in danger of going under.

Interestingly, having mentioned Zimbabwe and post-Soviet communism, China is number 109; Venezuela is number 106; Cuba is number 75.  There are not a lot of communist or even communist leaning countries left in the world, but there are enough to spot a trend – although it is counterintuitive, they do not have large public debt burdens.  They all have better debt/GDP ratios than the United States.  They are also not nations where we would wish to live.  We would like to emphasize that we only included Venezuela in this list for the sake of argument; Hugo Chavez is belligerent, but he's no philosopher.

Maybe the size of a nation’s public debt vis-à-vis their GDP is not all that significant a measurement.  Fiscal conservatives rule the roost in nations which are mostly stagnant and bland, with no real growth, little standard of living, and no leadership on the important environmental or social issues of the coming century.  Maybe, just maybe, we ought to focus more on what that money is being spent on, and less and less on whether it is being spent at all.

The same is true for individual families.  We at Big Myrtle’s place are too cheap to spend a lot of money on frills and thrills, so we don’t own iPhones or drive a Prius, nor have we been to Disneyworld or even out of state for that matter in recent memory, but we conversely don’t believe that not going into debt is of itself a legitimate business plan.  Some time in the next couple of years we intend to borrow money, for example, to put up solar panels and convert our house from a grid drain to a grid provider.

This weekend we are going to track down cheap alternatives to new gutters for the roof, so as to collect water in the “gently used” rain barrels we recently had donated by friendly neighbors (Thanks, Brooke and Kathleen!), and while we would dearly love to get the gutters for free also, we recognize that we will probably have to pay for them.

It turns out the strongest measure of the strength of an economy may well be how much collectively the households in a nation spend.  The United States is measured as the world’s largest economy by GDP, and that is equalled by our rank in terms of household consumption.  At $10,010,111,000,000 in 2008, we spent a little more than three times as much as Japan who came in number two with $2,838,964,000,000.  For those of you trying to count the zeroes, U.S. Americans spend roughly $10 trillion a year; the Japanese spend roughly $3 trillion a year.

Equally telling, we spend as households roughly 71% of GDP; #2 Japan spends 58% of GDP; #3 Germany spends 56% of GDP; #4 Great Britain spends 64% of GDP; #5 France spends 57% of GDP.

Our economy, in other words, is driven by the sale of items, and items are only sold when there are people buying them.

The question, then, is not “should we spend” but rather “what should we spend on”?  Our vote at Myrtle’s place is for sustainable infrastructure, like solar panels, clotheslines, water collection systems, alternative fuel vehicles like an EV or a high-mileage hybrid, gardening equipment, insulation for your attic, etc.  And maybe some books.  Anything but a Snuggie.  Because lets face it, we should all really prefer a recession to collective materialistic dweebitude.  However, we assure you that personal spending can attain sufficiently impressive numbers to bolster our global standing while spending purely on goods and services which will make our planet a better place to live.

Our own purchasing decisions will be based largely on the production system we have placed on our “big board”.  We have a category for “On Order” items which must be either purchased or otherwise acquired, “Germinating” for things we have planted or started working on, “In Production” for currently fruiting plants and/or projects currently providing payoff, and “Dormant” for perennial plants or projects which are currently not “In Production” but which will be again.  While our board is not limited to just plants or chickens, we find gardening to be a good metaphor for everything else in our inventory of projects.  And our motto is to “Water what will grow,” a slogan we stole shamelessly from Rev. Dan De Leon from Friends Congregational Church, whose wit and wisdom make him a valuable Friend of Myrtle. 

We do track our debts, including mortgage, car payments, student loans, and a couple of other bills, and we do everything we can to avoid adding to this list.  Credit cards are an absolute no-no at our house, for example.  But our conversations about money are not debt-oriented – our focus is on productivity.  We suggest that this ought to be part of the larger sphere discussions about money, as well.  It will be all well and good if we get our national spending problems under control only to discover that we lack the requisite will to spend money on those things which will do the most good for our future sustainability in the coming decades of climate change and global workforce greying.  We’ll be doing our part; we hope you join us.

Happy farming!