Tuesday, September 23, 2008

An Easy Analogy

I first used a version of this analogy in Richmond on CBS 6's "Virginia This Morning," on 4 September 2008. It seemed to work well and some people seem flummoxed by the recent market disturbances so I thought I'd share it here.

The national debt is like a guy sitting in a boat called The Economy. When the national debt is small, the guy is skinny and there is plenty of distance between the boat and the waterline. If a wave (a crisis or shock) comes along, the boat may rock but it will stay afloat.

When the national debt is big, by contrast, picture a big dude -- South Park's Eric Cartman in the Kathy Lee Gifford episode, Marlon Brando near the end, or Jared before he found Subway sandwiches. Barely afloat on calm seas, the first big wave that comes along may swamp the poor little boat.

Now, because the boat is an analogy for the economy, we have to allow it to change size. Until recently, the boat was growing, albeit more slowly than the guy (debt). That gave advocates of the debt (of which there are too many, imho) reason for hope. But consider this: the boat has stopped growing and may actually shrink and at precisely the same time the guy is scarfing greasy donuts and washing them down with beer, and not even the light stuff.

Add on top of this the fact that a big wave may come along, perhaps a manmade one at that, and you can see why everyone is spooked.

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