Generational Accounting
One of my favorite business topics is long-term thinking. I am of the opinion (largely uninformed) that most companies, municipalities, states, and countries are short-sighted in their business plans. One can hardly blame them- short-sightedness tends to ensure short-term survival. A company can’t last 100 years if it doesn’t last one year. A politician won’t get re-elected if he shortchanges the voting public in favor of young or unborn constituents. More chillingly, a government might face revolt if they impose the kind of austerity that could be suggested by today’s topic:
Generational accounting. I couldn’t find a succinct definition on the web, but suffice that generational accounting is the study of how the fiscal policies of one generation might impact future generations. In particular, this has to do with debt loads and benefit coverage.
For this post I studied this great article at the Tax Policy Center. It lists many scary concepts, most of which you’ve read before. In short we’re spending too much, saving too little, and forging irresponsible policy to please the masses. This is true at the family level, the corporate level, the government level, and the global level.
There are criticisms of generational accounting: it assumes quite a lot about the future state of the market. Sometimes numbers or deadlines are picked almost at random. Nevertheless, I am constantly dismayed by the short-sightedness I see in public and private policy. Generational accounting is one area of study that helps to address my concerns.
