"Keeping the Faith" in Services Generation

Much of today's high skill services generation and knowledge preservation are closely linked to government budgets, even though financial obligations toward this end are being rolled over and delayed as long as possible. One is compelled to wonder: How much GDP is even made possible through current resource capacity and reciprocity, instead of expectations for future claims on wealth? The fact so many rely on presently provided services which won't be repaid anytime soon, is creating problems for long term growth and output. This is already being reflected in the negative political scenarios many nations now face.

As Timothy Taylor noted in a recent post, there was a certain predictability about long run U.S. budget deficits that would eventually come to pass. According to Taylor:

Because two major federal spending programs are focused on older Americans--Social Security and Medicare--it has been utterly predictable for several decades that the long-run budget situation would come under strain at about this time.

When it comes to high skill services generation, healthcare is one of the more pressing concerns. He continues:

But the projected rise in government health care spending of 3.2% of GDP is a challenge that no one seems to know how to fix. It's a combination of the rising share of older people, and in particular the rising share of the very-old who are more likely to face needs for nursing home and Alzheimer's care.

Let's briefly consider some recent historical context. I just finished reading the book I.O.U.S.A. by Addison Wiggin and Kate Incontrera (sorry I couldn't provide an online link), which was published in 2008. Even though this book is all over the map in certain respects, it's an apt reminder that long term debt obligations were still being taken seriously by practically everyone, prior to the Great Recession and shortly thereafter. Perhaps that explains why some who contributed to I.O.U.S.A. expressed optimism: Once the need became obvious, people would step up to the plate and government debt would be addressed before it could spiral out of control.

Alas, the need is quite obvious yet nothing on the horizon suggests this hopeful scenario will occur, after all. Consequently, much of the decades long optimism re budgetary sustainability, is giving way to dismay, blame games, and wishful thinking such as MMT. It feels odd after having read I.O.U.S.A., to realize that expending energy on solutions for government debt is now basically a fool's game for anyone in a position of power. Yet nothing has changed. Once long term debt loads reach a certain point (and no one knows when that is or what it consists of), the genie cannot be put back into the bottle. We would be facing a very different national economic reality.

With such a dramatic shift, the marketplace for high skill time based services as they are currently constructed, would greatly suffer. What has finally become obvious - and none too soon - is that reform from within is proving impossible. No one will tolerate spending cutbacks until governments are no longer able to borrow on the terms they have come to expect. Timothy Taylor highlights the inertia we face in the meantime, for healthcare:

...every dollar of government health care spending represents both care for a patient and income for a provider, and both groups will fight hard against cutbacks.

In a sense, there is an awareness what could happen, just under the surface of today's dialogue. Since nothing has been taken care of in positive terms, however, that subtle awareness is expressing itself in negative ways. Hence demand for healthcare and other vital time based services is cloaked in insistence that existing supply side limits be reserved for natives - in other words leading to "this nation/system is full" talk. Likewise, another sidelong approach to the problem, has been the demand from conservatives and progressives alike for job creation which includes income levels or benefits capable of meeting healthcare expenses as they are now - despite the fact such talk runs counter to economic realities.

Even though interest payment levels are just one facet of long term debt issues, it's an important one. Timothy Taylor also stressed that interest payment obligations for past borrowing stood at 7.9%  in 2018. While that doesn't sound like a big deal, if nothing fundamental changes (which is of course the main concern of this post), interest payment obligations could balloon to 22% of all federal spending by 2048. That's one heck of a difference and a total game changer as well.

How to "keep the faith" that nothing will go wrong? Can we embrace production reform which buttresses the wealth creation of our existing systems, instead of posing threats to them? Can we ask our healthcare providers to join the effort in stepping away from a debt centered existence, to wealth creation which utilizes time based services as sustainable knowledge preservation?

If we can create forms of services generation which build new wealth at the outset, perhaps our governments won't ultimately end up with higher interest rates which force their hand in unwanted austerity, not to mention the havoc that would cause for what has become our services oriented economic existence. In the long run, wealth creation utterly relies on circles of sustainability, which means more use of resources that can be reciprocated in the present. Fortunately, it is feasible to build a new social contract for a wide range of services generation. Let's give it a try, while there's still time. Because time is running short.