Let’s face it. The study of economics is boring. The subject has been called the unsocial, non-scientific social science. Yet, economics may form the most essential part of society.
The mass killings at the Washington Navy Yard have dominated the news this week. Like previous incidents in Aurora, Colo.; Newtown, Conn.; and Columbine, Colo., the same story has played out hour after hour from dozens of different angles over a number of days. Last week, it was the floods in Colorado. Earlier, it was tornadoes. Americans tend to respond to whatever the tragedy du jour happens to be. However, as a people, we seldom look ahead, placing little emphasis on prevention and merely putting salve on the wound.
Around this time next month, we’ll all be talking about the consequences of having the nation’s credit rating lowered again. But, it’s not likely that public discussion will occur until it’s too late. We’ve known about the possibility since the standoff on raising the nation’s debt ceiling in the summer of 2011. Because of the reluctance of Congress to approve the increase, the United States — for the first time in history — lost its AAA rating. Since then, it has been lowered twice more, first to AA and then, at least according to one rating agency, to AA-.
A lowered credit rating affects the economy in two ways: first, it’s harder for the U.S. to borrow money from various institutions, and second, money that we do borrow is “more expensive” because we’re charged a higher rate. Of course, in an ideal world, our nation shouldn’t have to borrow at all. But, that would require a balanced budget, something that Congress seems incapable of constructing...