In the midst of the epic dysfunction known as the 16-day government shutdown, we lost sight of the fundamental issue whose inescapable logic cuts across politics and party lines: We are feeding the rapacious appetites of our current selves (we want what we want now) at the dire and escalating cost to our future selves (whom, we assume, will somehow have the patience and resources to bear the burden). If that sounds unworkable and unsustainable, it is.
If government spending continues apace, feeding the monster known as the national debt will swallow the resources of our future selves, whether we personify that concept as ourselves at retirement or our children who will inherit an astronomical bill for our rash and compulsive spending.
We cannot expect Washington to solve these problems, because politicians are, by definition, creatures of the moment who want to please their current constituents who will re-elect them, rather than worrying about future constituents who cannot vote. It’s up to us to advocate for our future selves, both personal and progeny.
As simple and logical as this might sound, it is nigh onto impossible to do. We simply can’t help ourselves, because of our human nature and a behavioral concept—applicable to most everything in life, including my bailiwick of investing—called time inconsistency, or hyperbolic discounting. Simply stated, we discount the present now more than we expect to later—that is, we act one way now—impatient, demanding our appetites (food, drink, investment returns) be met at all costs—while deluding ourselves that, in the future, we’ll somehow be patient and better able to act rationally and take care of problems. But when later becomes now, we are just as impatient. The easiest and most universal example is dieting. We indulge now, telling ourselves we’ll diet tomorrow. The parallels to our bloated spending and ballooning debt are too obvious to mention.
The root of the problem goes to our human origins, when overlooking immediate needs was reckless and life-threatening. Consider the 1.8-million-year-old pre-human skull unveiled recently, with its massive jaw and big teeth, but small brain. I’m certainly no expert in human evolution, but it doesn’t take much to imagine this ancestral precursor was more concerned about eating now than preparing for the future.
Yet, humans did overcome that predilection, through making tools, domesticating animals, growing and storing grains, smelting ores and metals, and eventually amassing great entrepreneurial capital structures that required upfront investment and lost opportunity costs in the moment. This became possible because objectives switched, from satisfying immediate appetites to gaining an intermediate, positional advantage for the future. My shorthand phrase for that is becoming ever-more roundabout.
Our only hope to stop the battle between present and future selves is to adopt a more roundabout perspective, seeing time differently in an intertemporal dimension. When we are no longer hyper-focused on the moment, we can pursue proximal aims that look across slices of time. We avoid eating, drinking, acting, and spending as if there is no tomorrow, so that we can, indeed, have better, healthier, and more prosperous tomorrow.
Admittedly, grasping these concepts about our human nature and our perplexing time inconsistency requires a mental leap. By becoming more aware, though, we give ourselves a roadmap with which to navigate the minefields of our own human nature. With an intertemporal perspective we can avoid the mad scramble for 11th hour solutions, which in politics always equals crisis.
Since we cannot expect Washington and its stable of political animals to do the work, we must press for it ourselves, by sending the message to Capitol Hill: Taking on ever bigger amounts of debt is mathematically unsustainable. Using the Federal Reserve and its zero-interest-rate policy to kick the proverbial can down the road only postpones the pain, which intensifies with the passage of time. The reckoning will be excruciating.
When another shutdown looms in the months ahead, we have to keep in mind who the battle is really between: our present selves versus our future selves. We who can think, act, and vote now, must advocate for the currently disenfranchised who will pay the bill.