Long before it was an aircraft maneuver taught to military pilots, a lazy 8 meant something to ranchers and cowboys.
A lazy letter or number was a branding number that appeared to be on its side as if it were reclining. And because it was immediately recognizable and difficult to confuse with any other symbol, it was a highly efficient form of communication, which is what branding is all about to this day.
A lazy 8, the numeral eight lying on its side, is still used by teachers to describe the mathematical sign that indicates infinity — time without end. Time without end is a pleasant enough concept, especially in the hands of poets and songwriters, and the infinitesimal is certainly useful in math, but lazy 8 time can cause communications problems in economics.
The focal point for these communications problems is in the concept of sustainability. The basic problem that often emerges in sustainability discussions has to do with the time frame. In the short run, everything and anything is sustainable. If we shrink the time frame down enough, we can live without food, without water, even without oxygen. And in the long run, especially if we expand it to lazy 8 time, nothing is sustainable; not capitalism, not economics, perhaps not even the universe itself, at least as we know it today.
The key to both understanding and policy, then, is to identify a meaningful time frame. In the early 19th century, Thomas Robert Malthus developed a theory about how humanity would end up. By his calculations, since food output grew arithmetically and population grew geometrically, eventually it would become impossible to feed everybody. Economies and civilization would break down and it would be “survival of the fittest.”
There is no doubt that Malthus was correct, but the accuracy of his theory turned out to be linked to technological and societal change. That is why, in the short run at least, the Malthusian nightmare of mass starvation has been averted in most developed countries despite startling population growth; and why famine persists mostly in countries which have undergone minimal social change.
Change is notoriously hard to predict, but if we make predictions based on the principle that nothing will change, we simply look foolish. If we look at a teenager making a pizza disappear, for example, and say (to ourselves, for these thoughts are best left unspoken), “if you keep eating at that rate by Thursday afternoon there won’t be any food left west of the mountains,” we know that won’t happen. Something will change.
One of the most recent examples of a “no-change” forecast — really a sustainability projection — came from Carnegie Mellon economist Alan Meltzer. In 2009 he said that, “There isn’t going to be enough money in the world in the years to come to finance the U.S. budget deficits.”
It was a perfect way to draw attention to the problem of the federal deficit. If U.S. government borrowing kept going at the current rate it would eventually suck up all the money in every country in the world.
Two economists, John Kitchen of the U.S. Treasury Department and Menzie D. Chinn, a professor at the University of Wisconsin-Madison, didn’t doubt that Meltzer’s projection was true — in lazy 8 time — but wondered what it would look like in a shorter time frame, say 10 years from now in 2020.
The results of their thinking and their research have now been published as a working paper by the La Follette School of Public Affairs at the University of Wisconsin. Titled, “Financing U.S. Debt: Is There Enough Money in the World — and At What Cost?” the reports adds some more realistic assumptions about markets and the costs of financing that growing deficit in global markets.
What the researchers found was that 10 years from now, the rest of the world would still have enough money to support our deficit spending level, but it would eat up over 18 percent of their gross domestic product. Whether they would be willing to give up that much to support our lifestyle is questionable at best, and, as the report points out, even if they were willing the cost we would have to pay, in terms of rising interest rates, would become unendurable.
In the end, the detailed research bears out the underlying truth of Meltzer’s observation about the world eventually running out of money to support us. What Kitchen and Chinn found, essentially, is that the world will probably run out of patience with us first. In either case our present course is unsustainable. And 2020 isn’t lazy 8 time. It’s just 10 years away.
James McCusker is a Bothell economist, educator and consultant. He also writes a monthly column for the Snohomish County Business Journal.
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