Are the Risks of Obesity and U.S. Borrowing Both Overblown?
(February 2, 2006)
In Tuesday's entry, I suggested a metaphorical connection between the explosion of obesity in the U.S. and a similar explosion in debt. But are the risks of both conditions overblown?
Many experts are questioning whether obesity is really all that bad for most people. Under rigorous analysis, the statistical relations between mortality and being overweight (i.e. dying youngerer than non-obese people) are not entirely convincing, as this piece in Scientific American outlines: is the risk of obesity overblown?
When Flegal and her co-workers analyzed just the most recent survey, which measured heights and weights from 1988 to 1994 and deaths up to 2000, even severe obesity failed to show up as a statistically significant mortality risk. It seems probable, Flegal speculates, that in recent decades improvements in medical care have reduced the mortality level associated with obesity. That would square, she observes, with both the unbroken rise in life expectancies and the uninterrupted fall in death rates attributed to heart disease and stroke throughout the entire 25-year spike in obesity in the U.S.So is fat getting a bum rap? Clearly, obesity and its relationship to health and disease is a dynamic, hard-to-pin-down set of complex interactions. There is even evidence that a certain virus may trigger accumulations of fat, even in animals which don't eat more or exercise less: some cases of obesity may be caused by a viral infection.
Modest amounts of fat, it seems, may enable the elderly to bounce back from certain diseases. So the picture on fat is anything but simple. But that doesn't mean that being overweight has no downside; you can start with the basic physics of what carrying around an extra 50 pounds for a few decades does to knees and joints: not good. While skeptics can argue around the edges of the issue, intuitively we all know that being obese isn't good for you. It may not kill you, but that doesn't mean it's risk-free.
In an analogous fashion, Wall Street pundits and D.C. politicos have argued for years that unprecedented levels of government and private debt are actually quite benign; in other words, they pose no risk to the great American economy. And ditto, of course, for the unprecedented trade deficit (chart above); according to the CIA factbooK, America's current account deficit is a staggering $829 billion for 2005. This huge imbalance is mirrored by the abysmal negative savings rate and rising consumer spending which has held sway throughout 2005:
The Commerce Department reported Monday that personal income increased at a seasonally adjusted rate of 0.4%... But December personal consumption grew 0.9% after a revised 0.5% increase the prior month... Personal saving as a percentage of disposable personal income was negative 0.7% in December. The rate has been in negative territory eight times in nine months and was negative 0.2% in November. The savings rate for all of 2005 was negative 0.5%, the lowest annual savings rate since a decline of 1.5% in 1933.So we're left wondering: is the American economic diet of massive debt and massive deficits really benign, or has the "medicine" of cheap, plentiful money and low interest rates simply obscured the risks? Isn't it analogous to controlling high blood pressure with a handful of pills, and reckoning that this is practically as good as being fit? But being fit and popping pills (or adding new debt) is not the same; it seems clear that Americans are solving their lack of savings and income by borrowing, and solving the high costs of paying interest by borrowing more.
It's difficult to believe that such gargantuan debts and deficits can continue indefinitely without a day of reckoning ever dawning. Perhaps it is finally sunrise on that day.
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