In which Scott Joens learns rapidly about macroeconomics through a premium learning product.
We will learn how to teach about wealth, a prerequisite to understanding both inequality and economics more generally.
"Stop," said Scott. "With that much public debt, could we default?"
He was using a very expensive product, and it was a source of profound shame. He absolutely had to do well on the Rawls Academy entrance exam, and knew he wasn't ready for it. Mom had assented to buying this and was, to the best of his knowledge, hiding the whole thing from Dad, who would be so very disappointed if he knew.
The public sector was the subject, and this product had been created by a Harvard professor named Schilling. The interactive sessions were impossibly good. Full of animated diagrams, able to accommodate seemingly any desired tangents, always observant of prior context... It felt a lot like Professor Schilling was right at Scott's elbow at all times. Trained coaches were in fact on call for live consultation whenever a customer requested—though, with just five free requests included in the package.
In response to Scott's question, the program displayed four topic options—all, very plausible interpretations of what Scott wanted to know and needed to understand. Scott selected "Some context: how much debt is too much?" Professor Schilling started talking (it was recorded video, though clearly computer-augmented for verbal transitions and such), accompanied by some really nice visualizations.
"The US government's total debt right now is about $80 trillion. The dollar amount of our debt is certainly a lot, but let's put it into perspective by thinking about how much income our economy generates, and then we can also talk about our public assets.
Each year our entire economy produces about $100 trillion of goods and services. This means that, correspondingly, total income across all US citizens is close to $100 trillion. Does that now make the $80 trillion debt seem manageable?
One factor is how much taxes the government collects. There are..."
"Stop," said Scott. "What are public assets?" Professor Schilling responded:
"Public assets are owned by our government, and include things like government buildings, roads and bridges, and financial securities such as bonds."
"Stop." Scott was about to ask about financial securities, but thought better of it. After a few seconds of pause, the product displayed new options:
- Continue with How much debt is too much?
- More about public assets
- Back to main Federal Budget topic
"Continue," he grunted.
"So," began Professor Schilling (this obviously was one of those computer-generated transitions),
"the government collects about $40 trillion per year in taxes. Though, in recent years, it has spent more than that, on social services, infrastructure, and so forth. Plus, it must pay about four percent interest on its debt each year. So…"
"Stop," said Scott. This seemed to be going in a more mathematical direction than he wanted. He thought a bit, and, choosing his words carefully, said, "I understand that we can't keep running deficits forever. My question is: what's a reasonable amount of debt?"
"Sure, I think I understand your question. To answer that… let's look at the big picture and talk about private and public wealth. Our government doesn't just have debt, it also has assets. Its assets minus its debts is its 'net wealth.' This net amount is also referred to as 'net public capital.'
It's not at all simple to measure the value of government assets like roads and buildings, but one might reasonably estimate that they're worth about $120 trillion. And this doesn't even include 'soft' national assets such as: our citizens' skills, or our natural resources, or our well-developed institutions."
"Stop." This was better, and piqued Scott's interest. He asked, "How much of our wealth is public, and… and, how much of it is private?"
"Here's a graph that shows the proportion of public and private wealth in the US through the last three centuries. As you can see, despite temporary fluctuations, private wealth has generally been about five times that of public wealth…"
Scott spent some time in more back-and-forth with the Professor Schilling. He found his way into an interesting simulation that let him see how much net public capital would change over long periods of time, given various changes in policies, in tax/expenditure rates, and in public investments.
But he became more and more curious about why there shouldn't be a more dramatic shift away from private wealth (the majority of which was in housing) towards a greater proportion of public wealth. Why did society need all that private wealth? Why not have dramatically better roads, and trains, and networks, and education? Because that would be communism? Because it would choke off capitalism?
Scott tried to ask more questions, and hunted around in frustration, but became convinced that the answer to his question wasn't anywhere inside this product.
Should he summon a Coach? He was torn. His intuition told him that it was important to know the answer to this question, and that, intellectually, much else depended on it. But another intuition told him that this particular issue was not likely to appear in the entrance exam. And he worried that chasing after it would gobble up his limited time and, of course, squander one of his valuable, free Coach requests.
His mouse hovered uncertainly over the Request Coach button…
Our democracy has not been successful in addressing the issue of economic inequality. Wouldn't an understanding of what wealth is be a good starting point for understanding civics, economics, and politics? What is national wealth? Does government absorb it from the private sector? Who should "own" the most wealth? Etc.
But it is pretty tough to teach… the concepts are a little abstract, requires a ton of background knowledge. Right? No, not right: future learning environments will be up to the task, making the advanced seem simple.
Economics will always apply to educational product development, too, and so of course some learning environments will be more amazing than others. Scott's mother purchased access to a premium service, which is quite expensive because it took a lot of work and money to build.
Wealthier parents, no doubt, will always fork over the money to ensure that their children succeed. As ever, it's not fair to be born to better circumstances. At the same time, it would not ever be smart to prohibit profit-driven development of premium services.