Home > Deficit, Health Care, Public Choice > Mankiw’s Deficit Neutrality Parable

Mankiw’s Deficit Neutrality Parable


Greg Mankiw has an excellent analysis on deficit neutrality using parable.

Friend: I am going to take off a few days from work and fly down to Bermuda for a quick vacation.

You: But isn’t that expensive?  Won’t that just add to your growing debts?

Friend: Yes, it is expensive.  But my plan is deficit-neutral.  I have decided to give up that half-caf, extra-shot caramel macchiato I order at Starbucks twice every day.  I really don’t need that expensive drink.  And if I give it up for the next three years, it will pay for my Bermuda trip.

You: Well, then, how are you going to solve the problem of your growing debts?

Friend: I am going to figure that out as soon as I return from Bermuda.

You: But in light of your budget problem, maybe you should give up Starbucks and skip the Bermuda vacation.  Giving up Starbucks could be the easiest way to start balancing your budget.

Friend: You really aren’t any fun, are you?

Sounds like what Obamacare will do huh?

It’s simple, the Democrats want to screw over the next generation so they can try and reap the political windfall now. It’s political keynesianism. In the long run “we’re all dead,” meaning the politicians will long be out of office and enjoying the good life on the taxpayer dime when the bill comes due. It’s up to the next generation to fix what this generation messed up.

Come to think about it, that’s what we’re doing now. Fixing the mess left from the 60’s.

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