Government debt as Percentage of GDP Image via Wikipedia
You probably know someone who faced a debt crisis. It may even have been you or your family. Whether due to foolish spending, unexpected illness or sudden unemployment, there is the sudden moment when it’s impossible to pay even the current bills – let alone the credit card, mortgage, car payment, or student loan. The frugal practices that seemed so difficult – give up cable TV, get regular coffee instead of latté – are revealed as inadequate. It becomes a question of food, shelter, heat. Even so, human nature rebels over and over. “I have to give up even that? Can’t I at least have my hair done …” It involves an entirely different way of life. People who have been through this are often changed forever: they simplify their lives and have a different view of needs.
Greece is experiencing the same dynamic on the national level. After decades in which many people paid little or none of what they owed in taxes, of high levels of government borrowing, of a declining birth rate and labor force, they are – in essence – nearly out of work and unable to pay the bills. Union workers riot in the streets while the parliament considers the austerity bill that will change the way of life forever. The choice is between bleak austerity programs or bleak default on the national debt.
As the US and other wealthier nations look on, we need to be aware of our own large and growing debt – more than we could pay off. The US birth rate has declined in most groups, the absolute number of people of the traditional age for college will peak this year and decline from here on out. Fewer and fewer bright young minds to invent new things and drive the economy. We Baby Boomers are moving past 60 and into our high-cost years, often without adequate savings or preparation.
As a nation, we need to ask hard questions, not about what will benefit us this year or next, but about the long run. We know that Americans consume 25% of many scarce resources like oil even though we constitute a much smaller proportion of the world’s population. We are not like Greece – we have some time in front of us. But if we cannot find a way to simplify, to consume less, to borrow less – it may be our own future that we are seeing as we watch the Greeks take to the streets.
Related articles
- Are Student Loans the Next Debt Bomb? (usnews.com)
- Greece’s rebel MPs told to accept bailout terms (guardian.co.uk)
- Greece Warns Bailout Rebels of Unknown, Dangerous Path. (isellerfinance.wordpress.com)
