Deficits and the Tragedy of the Commons
Pondering Greece, I wondered about the individual and the state. Sometimes what is good for one person is bad for all.
That took me to a graphic of the federal budget in 2020 in which entitlements, which are good for individuals, are dominant. The Congressional Budget Office projects that Medicare will be 17% of the federal budget, Social Security: 22%, and Medicaid: 8%. The probable result? Burgeoning deficits.
The Trustees Report for 2009 on Social Security and Medicare corresponds to the surge in entitlement spending. As a pay-as-you-go system, current workers pay current social security benefits. In 2016, because of the baby boomers, the revenue will be insufficient but there is a trust fund. By 2037, the trust fund will have been depleted. For Medicare, 2017 represents the year that the money starts to run out unless current health care reform legislation has an impact.
Your opinion of this potential tension between individual well being and budgetary crisis?
The Economic Lesson
Called the tragedy of the commons, meadows are overgrazed, lounges are messy, and the air is polluted when commonly held resources are bespoiled by individuals pursuing their own self-interest. Perhaps burgeoning deficits are a version of the tragedy of the commons.