National governments and the sport of figure skating share management by elected politicians; that provides some interesting comparisons. Enlightening, even.
Let us consider for a moment: The United States is spending much more than it collects from its citizens. It does so by borrowing the money to fund its deficits. That is the national debt, presently more than $57,000 for every living citizen. That is occurring because the social welfare program presently consumes much more than the available U.S. government cash flow. Reducing this deficit will require reductions in spending for Social Security, Medicare, Medicaid and Obamacare to mention just a few. No present politician is willing to attempt that, so the deficits persist and the debt only grows. At least, until it is so monstrous that none will lend anymore.
The International Skating Union that holds international events and the United States Figure Skating Association that governs U.S. events are also spending more than they receive in income, for similar reasons. But rather than borrowing , these organizations are diminishing substantial savings accumulated in past years when large TV audiences provided them significantly more income than they currently enjoy. The spending in this case is necessary to continue a level of operations that can not be funded by the now reduced income from a much shrunken TV audience. But like the U.S. government, the elected politicians are afraid to reduce operations because they use them to generate the votes they require to maintain office.
Thus the growth of the U.S. national debt and the shrinkage of figure skating endowments reflect the same phenomenon. They will end the same way, in insolvency. The math is simple and inarguable and the program can continue only because everyone is presently having a good time and can hope that the bill collector will hold off until some future sucker is holding the empty bag. Channeling King Louis XIV: “Apres moi, le deluge.”
We find this interesting because it so perfectly expresses the reasoning of the 18th Century Liberals whose thinking produced the United States. They knew that elected politicians would behave in this way, given the chance. It’s so very human, right? So they set up a small, weak, underfunded national government that simply lacked the resources to produce this sort of trouble. At the time, there were some who wanted a more powerful government and such interests have remained, working ever since to enlarge government power and scope. That “Progressive Movement” was to be held at bay by the creation of the Constitution. Well, that was what it was for. We can only guess how many of the Founders believed that it would work for long. We know that Benjamin Franklin had doubts.
Actually, the Founders’ Constitutional protections endured from September, 1787 when the document was adopted and signed, until 1803, when in Marbury vs. Madison, the Supreme Court awarded itself the power to decide what the written document intended. That shifted Constitutional protections from a piece of paper to the handful of Supreme Justices whose decisions reflect their politics. From that view, the American Constitution fulfilled its makers’ desires for six years.
That failure, it seems to us, was inevitable; the past cannot control the future for long. Human nature does not allow that. And so far, human nature has not changed, Which is the explanation for the impending insolvency of the International Skating Union, the United States Figure Skating Association and the United States Government, Plus much of the rest of the world, since we now live in a world wide community, financially.
People can see the dwindling of an endowment as spending consumes it. It matches their own experience. The growth of sovereign debt is often less obvious. Just consider this: What happens if all the holders of U.S. Treasury bonds were told that their holdings were worthless as of that morning? Individuals, banks, businesses would lose the money invested in those bonds. What would result? Or perhaps the government would repay say, half the money. Or it might say that all would be repaid, but not until ten more years.
Remember that any money that the government uses to repay bonds and of course, interest, has to first come from taxpayers when it cannot be borrowed. If the government just defaults on the payment, we’re back to all the bondholders being stiffed, leaving a lot of them broke. Yes, including some of the banks.
So, it takes longer for a government than for a sports body to go bust, but it’s no better and no less inevitable when spending runs amuck. As in democrtic organizations, it seems sooner or later, often to do. After reading recently that 68% of Americans destroy their credit before age 30,we can understand, sort of.