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  • The unreality of numbers

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    — Attributed to Benjamin Disraeli by Mark Twain
    Whether the 19th-century British politician or the American humorist said it first, the quip will stand for all time.
    Public policy questions, like quack diets, are susceptible to specious arguments bolstered by dubious figures. Impassioned advocates won't stop prevaricating if they believe such tactics will sway public opinion to their side. Humans love to flatter ourselves that we are rational creatures calculating tradeoffs, but we are more easily swayed by emotions. For example:
    Congress is currently posturing over the "fiscal cliff" — a metaphor for the date when spending cuts and higher taxes will take effect unless lawmakers act. Buried by this melodrama is the fact that Congress hasn't passed a budget in three years. Congress is held in low repute because they prefer grandstanding to performing basic duties. After chronic delay, do politicians expect to regain public esteem by playing chicken with their own deadlines? That seems more like lawlessness than responsible governance.
    Numbers are supposedly easier to understand than metaphors. Math is the language of science, and science is alleged to explain most of reality. Yet some numbers are so large people can't really grasp them. Citing the number of blades of grass in your lawn would confuse rather than clarify. Areas of lawn are more useful. Similarly, federal budget numbers have grown so huge that they've jumbled public sentiments rather than informed us. Annual federal spending deficits are now running above a trillion dollars a year, adding to a debt now over $16 trillion. Unfunded liabilities — payments obligated in the future for mandated entitlement programs — total nearly $100 trillion. Try to picture that much money in physical terms.
    Gangster movies bring gasps from audiences when a million dollars in $100 bills are crammed into a suitcase — which is literally possible. One-hundred-million dollars in hundreds fits on a standard shipping pallet stacked to chest height. One trillion dollars would fill 10,000 pallets and cover an area larger than a football field.
    While politicians bicker, spending proceeds apace in the absence of budgeting, driven mainly by the relentless demographics of an aging population collecting on promises made to it. About a third of that spending is borrowed money — "from China," according to the cliché. In fact, much is from individual and institutional investors in treasury bonds.
    The left longs to tax more money away from "the rich" — a small demographic whose fortunes diminish in the absence of economic growth — in order to subsidize more consumption. The right hopes to increase overall prosperity, the tax base and total tax revenues by promoting growth. Which makes more sense?
    Blame-shifting has limited utility. Many of "the rich" are bondholders collecting interest on the debt. Taxing them more to pay more interest is essentially a shell game. Ending tax preferences for government bonds would diminish their value and raise the government's cost of borrowing. Public pensions are supported in large measure by investments in the private sector.
    The saddest aspects of deficit and debt-laden governance are twofold:
    1. Current leaders aren't clever enough to bicker their way out of the mathematical trap.
    2. Young voters seem least aware this situation is "unsustainable" — a generational buzzword common elsewhere — yet are most likely to suffer dreadful consequences in the long run.
    Bickering can't reduce the costs of aging crushing the body politic. More promising is biotechnology that replaces surgery, reduces the financial bite of degenerative diseases and enables people to remain robust.
    Technical and economic advance require growth more than redistribution, foresight more than fantasy, and courage over blame. Let's hope real scientists outside the spotlight are working on this. The glare is now on the charlatans.

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