Debt, deficit, winners, losers

I’ve read several articles about the CNMI’s deficit, only to get to the end of the pieces and realize I haven’t the foggiest notion what they’re talking about.

What’s all this “deficit” stuff? The term is often being used when the word “debt” should be used. Debt is how much you owe. A deficit (within this context) is how much more you owe in any given period compared to the prior period. Deficit is the rate at which you are increasing your debt.

Debt and deficit are not the same thing.

Let’s flog the point further. The government’s deficit is how much more it spends than it collects in some period of time. A year is a convenient and conventional period of time to use for such things.

If you decrease the deficit from one year to the next, it doesn’t mean you decreased the debt. Since you’re running a deficit, you’re still increasing the debt. The decrease in the deficit merely reduces the rate at which the debt is increasing.

On the other hand, if the government spends less than it rakes in during some period of time, then it’s running a “surplus,” which is the opposite of a deficit. A surplus will reduce the amount of the debt.

So–what’s the deal? Is the Commonwealth running a surplus now? I don’t know. But if that’s the grand claim, though, it’s been either stated, or reported, or both, in such poor terms that the claim doesn’t have any credibility.

Once that these terms are straightened out, though, maybe we can get rid of the following term: “Asian Crisis.” Sure, Asia’s financial woes are a factor in our economic situation. But they’re not the ONLY factor.

“Why is the debt growing?”

“Uh, the Asian Crisis.”

“Why is policy so anti-business these days?”

“Well…the Asian Crisis made us do it.”

“Why are tourists flying over Saipan and going to Guam?”

“Er…the Asian Crisis.”

“What is the difference between a debt and a deficit?”

“Uh–Asian Crisis?–no? Well, uh, I don’t really…hey, my butt itches.”

Indeed. Well, the Asian Crisis is basically over. That excuse is kaput, old news, beat to death, invalid now.

But the crisis did help sort out the winners from the losers. And why not? The world is fast polarizing into two extremes: the productive / rich economies, and the unproductive / poor economies.

Those that don’t get ahead will fall behind into the loser’s heap. They’ll squander their scant funds on deficits, blame everyone else but themselves for their woes, and will flounder in the world’s shadows and scratch their economic butts in utter confusion.

The next step–and this will prove to be one of the major themes of the new century: the winners will swoop in and snare the natural resources from the losers, via outright military muscle or via political/financial manipulation. The CNMI just might want to think this one over….]

…Scratch, scratch, scratch.