In 2001, I published an obscure paper that concluded “Econometric tests and fiscal solvency accounting confirm the important role of growth in debt crises.” Based on this, I can now say that Haitians can rescue the US from an impending budget crisis. The crisis is already severe, with previously unthinkable warnings that US government bonds might lose their AAA rating.
What does this have to do with Haitians? Here’s the longer, more technical version (if you’re impatient, skip to next paragraph): budget solvency is about the future, not just about the present. Our ability to service our government debt is greater the higher is expected growth of the economy, because that means higher expected growth of tax revenues. If you expect tax revenue to be a lot higher tomorrow because of high growth, then you don’t have to worry as much about where you find the tax money tomorrow to pay interest and amortize principal on the debt. Economic growth equals (Growth of GDP per person) PLUS (Growth of Population). So one overlooked aspect of Population Growth is that it is GOOD for preventing budget and debt crises. And population growth is driven in large part these days in the US by immigration from places like … Haiti. Of course it will take more than Haiti alone to supply enough immigrants, but letting in more immigrants to the US from poor countries is desirable already for both us and the immigrants.
Here’s the short version. If you are worried about having enough tax revenue to pay interest on the government debt, find more taxpayers! And look, here are some people volunteering to become new taxpayers: Haitian immigrants fleeing quakes and poverty! So let’s open the door to our Haitian fiscal rescuers, who will also lift themselves out of poverty as dramatized by a previous post. It’s a TWOFER!
NOTES: my attempt to make an exam question out of this did not attract a large response (OK I was mostly just trying to get out of writing the blog post last night). It did produce one very funny satire, and one good two-part answer, the second part of which was the “right” answer (a special virtual Rolex (Aid) Watch prize for Kevin!)