TIME AND AGAIN…

Time flies like an arrow. Fruit flies like a banana. ~ Groucho Marx

Recently, physicists reported that they may have found sub-atomic particles (neutrinos) that travel faster than the speed of light; an occurrence that if verified would be inconsistent with Einstein's theory of relativity. That could cause a fair amount of soul-searching in the physicist realm. Meanwhile, in the non-scientific world of Washington D.C. policy-making, time seems to have stopped altogether. Our elected federal representatives get stopped any time they deal with anything related to creating economic/fiscal policy. They continue talking past each other and consciously avoid creating appropriate, effective fiscal policies for our time – a time of continued macroeconomic weakness, elevated long-term unemployment (6.2M Americans have been out of work for half a year or more) and increased inequality.

How can time be so different? I have become so inured to the incomprehensible, outrageous positions politicians (mostly Republicans) have taken regarding the US economy – oh, say regarding the deficit and fiscal policy in a time of sustained unemployment – that I've started doing 2 things. First, I've stopped listening to the media's reports on "the latest" goings-on about Congress', the president's and/or the "super-committee's" macro-economic policy deliberations. It's pointless since they are merely stonewalling any movement to a rational policy due to base politics. They'd rather wait until the very last moment and pass another sub-optimal measure that at best addresses a few of the effects not the causes of our economic malaise, or produce another temporary, partial "budget," so they can pretend to be doing something useful. Nothing substantive is happening that will relieve real citizens' economic unease. And fewer people outside the Washington beltway are fooled by the politicians' empty talk. Which explains in large part why only 15% of surveyed citizens approved of the job Congress is doing; I'm surprised it's that high.

Second, I'm again wondering how seemingly bright people – the folks we've elected to manage our nation and lead its future development – can believe in such outlandish, downright short-sighted, stupid behavior. Despite no evidence of competence for resolving our on-going economic problems, there appears to be absolutely no political soul-searching on the part of Republicans or Democrats that would create more reasoned and responsible approach to getting our nation moving and growing again. Instead, it's always one more time, without any feeling, to do nothing useful except play with each other and blame someone else.

Once again, the narrowness and myopia of political discussion astounds me. What time (and place) do they think they are in? Politicians only care about their (and their funders') current, narrow self-interests. The only time they seem concerned about is today, not tomorrow or afterwards.

Economists have several tools for evaluating this inept behavior, including present value. Present value is the current worth of a future sum of money or stream of cash flows given a specified rate of return. Future cash flows are discounted at the discount rate. The higher the discount rate, the lower the present value of the future cash flows. In not acting as if tomorrow (the future) has any value, politicians essentially have a nearly infinite discount rate – not valuing the future at all – where future consequences are completely dismissed. Most non-politicians (e.g., normal adults and businesses) do place value on the future, act accordingly, and expect other folks to do so as well. Actual people's implied discount rates are often subject to debate, but probably range from 3% to 8% at this time. Thus, there is a monumental difference between the politicians' discount rate and that of the rest of us.

For me this difference in time-perspective explains a fair amount of the impending tragedy of politicians' neglectful, juvenile behavior. If they don't value the future (other than getting re-elected), have no time for serving the broader public's interests to get the economy growing again, and choose only to recite dogmatic, selfish ideology, why would they do anything except be histrionic? They're stuck in time, unable to agree to any compromise that could lead us forward and improve ourselves, because they don't care at all about the future. And who suffers most from this? We do.

Should we be surprised that our politicians have difficulty making politically-unpopular decisions in a timely manner – like reducing entitlements and reducing defense spending? Not at all, they are difficult decisions that if properly done, will initially upset many. But these decisions must be made ASAP; and aren't being made by politicians whose job it is to make them. I didn't vote for "my" politicians to merely continue the unsustainable status quo of no growth, high unemployment and growing inequality, I voted for them to look forward, solve these current problems and hopefully make things better. At this time, no politician now seems interested in doing his/her real job.

This time is not that different from others in the past – we remain in a significant recession and need to get the country growing by augmenting government spending to put more people back to work. In time and after we start growing again, unemployment will fall as businesses and consumers start to invest and consume more. [The most recent quarterly increase in real GDP was a miserable 1.3%.] What we now don't need at all is reduced government expenditures that would further prolong the recession. The Republicans' unyielding fetish in "making government smaller" and "no new taxes" at this time is wrong, fool-hardy and self-defeating. It's yet another example of politicians being "stuck in time" (by not having any interest in considering the future), thereby making our impending prospects needlessly more difficult and dour. This leads to increasingly resonant feelings that this time throwing all of them out on some sidewalk may be useful. Or maybe we should just feed them some special neutrinos to get them moving. If only.