My company's web site pointed me to this presentation. It seems very relevant to what we have been discussing... Now, when should I start stocking my bomb shelter and buying more weapons???
Thoughts on Dave's pretty pragmatic and depressing viewpoint? I thoroughly agree with his perspective. It's not a revenue or spending problem.... It is both... Now let's fix it...
Honeywell - Dave Cote: Everyone Pull Together
A Balancing Act: Federal Debt, Deficit and Stimulus Pres'n
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16 comments:
What this comes down to is the fact that the country is getting older, and we haven't saved for it.
What do we do?
Here, by the way, is a link to the latest version of Stinson Gillaspy presentation which looks at these problems from a different perspective.
http://www.amsd.org/docs/2011%20winter%20conference/Gillaspy%20Stinson%20ppt.pdf
I think it is more than just "Aging Population"... It seems we keep adding more and stickier safety nets. Where is the incentive to take responsibility for bad decisions and live with the consequences?
The "Government/Society" seems to be bailing out banks, citizens, companies, etc more and more for doing stupider, lazier and greedier things. What is worse is that they are doing it with borrowed money. Whereas the strength of America has always been that it lets the stupid, lazy and greedy pay the consequences for the actions.
Therefore natural consequences from failure drove learning and wiser future actions. Now we are like Parents who keep bailing out our Children. Of course the children keep misbehaving and making foolish decisions.
For the readers convenience:
AMSD Gillaspy Stinson Presn
A reminder: AMSD likely has a very "Public School" oriented perspective and possibly a bias. Just a thought.
Another excellent presentation...
It will be interesting what the future holds for us... A good thing I have been squirrelling away those dollars... It looks like I will need to support myself and at least one foolish person in my retirement...
"Where is the incentive to take responsibility for bad decisions and live with the consequences?"
It's everywhere, but people make bad choices anyway. And what does the badness of these choices consist of. I remember when Bush proposed Harriet Miers for the Supreme Court. What caught my eye was her financial disclosure. Miers had been a partner in a big time Texas law firm. She had made lots of money in her life. She had contributed to 401k's, and yet at the time of her nomination, she was pretty close to broke. Where did her money go? What was the nature of her profligacy? Was it wild trips to Vegas? Well, no. it seems the bad irresponsible choice she made was to support her elderly mother, the cost of which had consumed her life savings.
How had she failed to respond to the incentive society provides encouraging us to throw our elderly out onto the street?
"The "Government/Society" seems to be bailing out banks, citizens, companies, etc more and more for doing stupider, lazier and greedier things."
If the consequences of the damage done to economy could have been confined to those responsible for causing it, I would have been against the bailouts. But that wasn't the case. We have seen people lose their jobs, their homes, their life savings, because of the actions of people who made catastrophic decisions for which the rest of us bore no responsibility.
"Now we are like Parents who keep bailing out our Children."
I have always seen it the other way around. It's the children who our bailing out the parents. The older generation didn't save for the costs of aging. It didn't put enough away for retirement, it failed to adequately insure for medical bills. The bill for that neglect is coming due. We have basically two choices. We can put together a plan to deal with the costs of aging on some sort of rational basis. It won't be cheap, but it will never be any cheaper than it is today. Or we can just make the decision to walk away from our elderly, leave them to their own devices. We won't have death panels, no one will be specifically responsible for the decisions to toss them aside. That will just be the result of bureaucratic decisions for which not one will be responsible, and no one will be at fault.
Conservatives believe morality is a matter of individual responsibility. One corollary of that is that if something happens for which no individual can be reasonably held responsible, or alternatively, if the responsibility for a moral choice can be shifted to another, than the person who managed to evade that responsibility can't be immoral.
That's why conservatives object to death panels, but have no problem at all with an anonymous, bureaucratic that doesn't perhaps actually deny care, but somehow doesn't find a way of providing it.
There is a highly technical concept in the criminal law which is similar. To lawyers, it's known as the SODDI defense, an acronym for "some other dude did it."
1. Apparently Harriet Miers' mother failed to save adequately for her retirement, Harriet hired a lot of expensive care instead of providing it personally, someone did not choose their insurance wisely, or something very rare and unfortunate happened. 3 of these 4 possibilities were within the Miers' control... Now did they make smart or foolish choices and should society pay for them?
2. G2A Crisis of Credit With this video in mind, I think there is plenty of "responsibility" to go around... What does Personal Finance 101 teach us: carry mimimal debt, diversify your investments, save for a rainy day, etc... Why should society pay people off who violated these basic common sense rules?
3. I meant Parents = Society and Children = Individual Citizens. Overall I agree with you, though there is another choice, rewrite the commitments to be in line with what was saved for...
"Sorry folks, you did not hold your Government accountable for keeping Social Security fully funded... Instead you were happy to have your wars, lower taxes, social programs, etc... Therefore there will be no Social Security payments until you are truly disabled, so you need to get back to work and earn a living."
Sounds like some good natural consequences to me !!!
4. I agree Conservatives seem to like to ignore the outliers. (ie out of site, not my problem) However the Liberals seem to be obsessed with the outliers. I kind of like Death Panels/Std Treatment rules idea, it seems that pure luck/wealth should not be the only factor in if you live or die... (ie you can afford treatment)
Imagine God up there shaking his head at us as the wealthy 80 yr man with a chronic health conditions gets another $1 million procedure to extend his life while 1,000 children die because they can not afford a $1,000 procedure. It must make him/her cry...
"Now did they make smart or foolish choices and should society pay for them?"
Miers chose to pay for her mother's care, saving society the money. And by doing that, she is destitute. So the question remains, did she make a bad decision? Saving us all that money? Should she be punished for the decisions she made?
"What does Personal Finance 101 teach us: carry mimimal debt, diversify your investments, save for a rainy day, etc... Why should society pay people off who violated these basic common sense rules?"
What does society tell us to do? Find a job. Get married, and have kids. Take out a mortgage and buy a house. Put money in your 401k. These were the responsible decisions people made, and for many people they proved to be ruinous.
A lot of the people who were giving that very sound financial advice were the same people who ran the American economy into the ground.
It looks like Harriet has chosen her lifestyle and is quite aways away from being broke... (by most peoples stds) She freely chose to quit her great paying job to go to Washington, maintain 2 homes so her Mother would have one, hired an in-home nurse, invested too conservatively, she gave 10+% to the church, etc.
I think you picked a poor example, she clearly chose this financial state. Besides articles stating multiple homes etc don't make us feel too bad for her. Her giving to the church and supporting Mom do seem like some good choices.
But hasn't she heard of an assisted living apartment with a staff that cares for the residents. And what is she doing moving to Washington if she cares so much for her ailing Mom??? And where was Mom's savings and Soc Security in this story. Very odd...
And how do you work as a single Lawyer making a high 6 figure income for many yrs and only have ~$1 mil net worth at your high point. She definitely was spending somewhere other than on Mom.
Free Money Finance Harriet Miers
Newsmax Harriet Miers
Now your not really telling me that "Peer Pressure" is responsible for people carrying too much debt, living in huge homes, driving those expensive cars, not saving enough and not being diversified in their investments. Sounds like something a teenager would say when he is caught smoking pot...
"Hey Man, They made me do it !!! And they made money on the POT too!!!"
People need to take personal responsibility for their choices and actions !!!
Unless you are thinking the tax payers should pay for a private home and live in nurse for each of our older citizens... Like poor old Harriet chose to do...
Please find a better example of the truly unlucky, I know they exist and we will need safety nets or charities for them. But we can't afford all of this babysitting adults that should know better. If there are no consequences, there is little incentive to improve and learn.
"Please find a better example of the truly unlucky,"
It think the point of my example was to find someone on the lucky side, who did all the things right in her life and made a lot of money in her life will still be dependent on Social Security and Medicare.
As for people who made the right choices, which turned out disastrously, they are hard to miss. I know lots of people whose mortgages are under water, who have been laid off from their jobs, and have lost their life savings. And I know lots of elderly people who are in practical terms, destitute simply because they made the unwise decision to live too long.
I think I'll discuss my views regarding the unlucky examples you raised in this weekends post. It deserves some thought. Here is an old link as a likely preview. G2A Recession Bad? Unless something new occurs to me as I ponder this.
With all this in mind... What do you or others see as the solution to this "Structural Problem"?
Raise spending and Tax us until the revenue and desire to work dries up? (ie Atlas Shrugs)
Cut spending and services until homelessness and starvation are rampant? (ie 3rd World)
It seems the Left and Right better start looking for some WIN/WIN solutions...
"What do you or others see as the solution to this "Structural Problem"?"
The solutions aren't difficult to find. Quite simply we must rein in the costs of medical care. It isn't a lot more complicated. The problem is with the politics. It is just extraordinarily difficult to put together the support needed to get any specific solution passed.
Solutions would be a lot easier, and political support easier to gain, if you didn't have one side screaming that there are no solutions. They insist that we cannot reform the system, that we must spend ever more on them, and that if we do NOT spend ever more on them, it is a "cut" and we all die. I know it's absurd, but that is really where we are.
J. Ewing
Most companies I watch tend to force improvements and system change by cutting the budgets. It is amazing how creative people get when the job still NEEDS to GET DONE and THEIR JOB is ON the LINE!!!
One takeover expert said that the first thing he does is chop 10% from every budget... He said every organization has that fat in place. Then he watches and goes after the next 10% a bit more selectively....
If we keep cutting and monitoring, this should work in the Public Sector. Of course, that extreme Public Sector job security needs to be reduced significantly to make this work... (ie incompetents that do not deliver need to fear losing their job!!!) Just like in the real world.
That's absolutely correct, and I've long advocated that approach for K-12 education. The only problem is that there are a few departments (school districts) who HAVE been responsible, and they will be hurt. The best way to proceed is to tentatively make these cuts, and then judge the business case of the proposed revisions. It avoids destroying your most able departments, and lets you find the deadwood more quickly.
J. Ewing
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