A picture is worth a thousand words

Alphia Abdikeeva, CIDH ProIgual

There have been some interesting, if perhaps slightly disingenuous images floating on social media networks lately. One of these eloquent images tries to accessibly explain to lay persons about the financial mess the world´s largest economy, the USA, has gotten itself into. It is a sheet presenting the US budget in terms of an average household budget, from which it is plainly obvious that the family lives beyond their means and the cuts they intend to make to get their finances in order are ridiculously small compared to what their debt obligations are.

Well, that´s one way to think about it. But there are other ways to think about it, too. Let´s picture the same household a couple decades ago. It had no debt and had healthy savings. But then a neighbor (let´s say, a banker by profession) asked them to loan him some money. The household did, but then the banker lost it on some unwise investment, and asked them to loan him some more. Out of goodness of their hearts (let´s presume that´s the motivation) the household did loan the banker some money again. Only now they had to borrow it elsewhere, let´s say abroad, to help the banker out. The banker, with this money, has managed to make handsome returns for himself. But he refuses to pay that household back, claiming this would make him go bankrupt which he claims would be a bad thing. Instead, to make ends meet, the household is expected to sacrifice everything they have been working and saving up for during their hardworking lives, like education for kids, healthcare, retirement, not to mention unessential stuff like house and food. That´s too bad.

Of course, this representation can be rightly accused of being over-simplistic and perhaps even not entirely accurate. But so is the other image. Is it really appropriate to compare the state budget to the average household budget? Yes, there is a lot of debt, we get it. But does the average family really have resources to wage wars that alone cost more than the entire budgets of some states? Would the average family be allowed to print the money to pay its debts with? And would any rational family sacrifice the future and wellbeing of their children to help out someone who does not really need help? (I mean the banker, but there are other actors, too.)

Importantly, that image detracts public attention from causes of the financial, and potentially social, crisis in the US, and potentially in the rest of the Western world. This bring to memory another image, with a caption: “If I try not to think about it, maybe that tsunami won´t come after all.” It is called Denial.