Many European countries and American states are just plain out of money these days. Last week’s This American Life podcast will tell you just how broke and dysfunctional the New York state government really is. Countless headlines about austerity measures and their consequent social discontent in Greece have now spread to other European countries like Spain, Portugal, Italy, and Ireland.
Austerity measures may be painful. But when faced with ever-widening budget deficits, there are only two solutions: cut spending or increase revenues. It’s that simple. Short-term borrowing may help when used as a last resort coupled with stiff loan covenants, but in the long-run it’s a simple mathematical equation. Politically speaking, it’s a nightmare as any politician who pushes for cuts in areas of public spending like education or healthcare will find his base leaving his ass on the curb come next election. Yet another instance of short-term careerism trumping long-term collective welfare/common sense.
Perhaps I can apply the recent pains of developed yet fiscally sloppy countries and states to my own life. Coming from a middle class background and pampered with parental money, I’ve never confronted financial hardship. I should remind myself never to take anything for granted. I’ll curb my spending habits now instead of later. Beware the golden handcuffs coming in the form of that first ostensibly fat paycheck. It’s easier to save while young than while older (think car, house, wedding, kids, retirement, healthcare, etc). It’s easier to live frugally now as an idealistic, energetic yuppy than as a disillusioned, cynical, middle-aged person who thinks he/she is entitled to some amenities.