Never put off until tomorrow what you can do the day after tomorrow

The FT has it's own version of the Sun's agony aunt columns, compellingly called Dear Economist. They tend to steer clear of the Jerry Springer show type situations and focus on the more mundane, and perhaps, more cerebral issues of the day. A recent letter from "T.N., of Limerick, Ireland" (the Irish always ask the best questions) posed the following: "I tend to procrastinate and leave tasks until the very last moment. As a consequence, I always feel as though I could have done more and that my potential has been somewhat unfulfilled. However, I find I concentrate much better and am more prolific with a deadline dangerously close. Can economics help me resolve this tension?"

"T.N." of Limerick doesn't compel us perhaps in the same way as the girl writing to Dear Deirdre in the Sun, who is caught in a love-triangle with her sister's husband and a local priest, but it's a valid and very relevant issue that we all as individuals and collectively confront on a regular basis. We delay because we can, even if it really hurts us to do so over the long run.

The agony aunt's, or in this case agony uncle's, response was fairly straightforward. "The answer is obvious: make sure you always have a deadline to hand, and you will always be prolific." Nothing short of profound.

The Bard himself wrote, slightly more eloquently, in Twelfth Night, "In delay there lies no plenty." We have all been given such sound advice in different ways, typically by a teacher or parent, over the years. And we all understand the value of immediate action, deadlines and the like.

The behavioural economists Dan Ariely and Klaus Wertenbroch recently conducted an instructive study of procrastination with three groups of students at MIT. Each group had to complete three assignments over the 12-week course. The first group had a separate deadline for each paper, after four, eight and twelve weeks. The second group had no intermediate deadlines: all three papers were due at the end of the course. Students in the third group were asked to impose their own deadlines. Students with well-spaced deadlines – those in the first group and a subset in the third who had spaced out their deadlines – tended to achieve the highest grades. Students who had assigned themselves no intermediate deadlines, or had been assigned none, fared poorly.

None of this is particularly surprising. The really practical issue is how to establish deadlines that are clear, and then stick to them, especially when there is no pressing need not to delay.

Similarly to "T.N." of Limerick, most governments around the world are faced with the many consequences of the financial crisis, one of the biggest of which is substantial budget deficits. They can either confront this issue head on, by raising taxes and cutting spending or postpone this issue by borrowing more and saving the problem until someone else's watch. In the liberal democracies of "the West" with regular elections, procrastination is often the safest short term political route. Raising taxes and cutting spending don't tend to sit well with the electorate. Without well established incentive structures then it's unlikely to be any different.

On a personal note, for example, when I started writing this blog, I knew that given that a) I wasn't getting paid to do it, and b) it's a taxing but rewarding undertaking then there were likely to be times where I would think "I'm not sure I can be bothered this week". Consequently, I thought, I'll establish some painful consequences for myself if I don't follow through on my commitments. If I miss my 9am Monday morning deadline I have to pay my wife £100, which she is allowed to spend "guilt free". In the second week of my entrance into the blogosphere I handed in my homework at 9.06 on the Monday morning, and thinking that my relationship with my wife is on a sound footing, I thought I might get 6 minutes worth of leeway.

Not a chance.

38 weeks later I have not missed the deadline again, as the pain of handing over that first £100 fine still cuts to the core. The process (while often left to the last minute) has become habitual. There are those who might say the habit is anti-social, like smoking, and therefore should be banned in public places, but there is a bigger issue now at stake for me. I don't want to pay, so I am going to keep writing.

To force our public servants to confront issues as they arise is more difficult. It can be political suicide to take on the really big problems early in their development, because your name will may be permanently associated with these problems. There is a serious issue with the fact that there is little incentive to act on the really big issues before things become untenably bad.

Nearly 70 years ago, when a horrible and unprecedented storm was gathering in Europe, British prime minister Neville Chamberlain found it inconvenient to see the truth about the nature of the evil threat posed by the Nazis. In criticizing his government's blinding lack of awareness, Winston Churchill said, "So they go on in strange paradox, decided only to be undecided, resolved to be irresolute, adamant for drift, solid for fluidity, all-powerful to be impotent." After the temporary appeasement at Munich, Churchill said, "This is only the first sip, the first foretaste, of a bitter cup which will be proffered to us year by year - unless by supreme recovery of moral health and martial vigor we rise again and take our stand for freedom."

Then he warned prophetically that "the era of procrastination, of half measures, of soothing and baffling expedients, of delays, is coming to a close. In its place, we are entering a period of consequences."

Churchill's words ring true for the current time, where globally governments have embraced a period of financial procrastination which will ultimately lead to "a period of consequences". The worst global economic storm since the 1930s may be beginning to clear, but as The Economist points out "another cloud already looms on the financial horizon: massive public debt."

Across the rich world governments have borrowed vast amounts as the recession has reduced tax revenue and spending grows to pay for bail outs, unemployment benefits and stimulus plans. We have rebooted the system but in doing so have transferred the cost onto a future generation of taxpayers and political leaders - we have procrastinated. New figures from economists at the IMF suggest that the public debt of the ten leading rich countries will rise from 78% of GDP in 2007 to 114% by 2014. These governments will then owe around $50,000 for every one of their citizens.

Not since the end of the second world war have so many governments borrowed so much so quickly, and today's increases in public debt, unlike the wartime one, may not be temporary. Even after the recession ends few rich countries will be running budgets tight enough to stop their debt from rising further. To compound this fact, the current ballooning of government debts is taking place just before we feel the real impact of the demographic shift that will see huge healthcare and pension costs of a "greying" population. By 2050 a third of the rich world's population will be over 60. The Economist reckons that the "demographic bill" is likely to be ten times bigger than the fiscal cost of the financial crisis. In the US alone, current "unfunded" social security and healthcare liabilities of the federal government tally to a figure around the $40 trillion mark, or around 300% of current GDP.

That doesn't really bear thinking about, so while the day of reckoning can be postponed it will be. In areas ranging from the environment and green energy production to healthcare provision and social security, government voices are making promises that their pockets can't keep.

In the UK this week, similarly, one of the key upcoming General Election battle lines was drawn. The shadow health secretary, Andrew Lansley, accidently indicated the bleeding obvious, that cuts in spending in real terms are a likely implication of the state of the public finances. Not exactly rocket science, but the very fact that he has acknowledged that purse strings need to be tightened has led to him and, by association, his party being painted as tight-wads.

In Prime Ministers Questions this week Gordon Brown proposed: "Let us have a debate about the choice that really does exist in the country between a Conservative Party that now wants to cut, even at a time of recession, into our basic public services and a Labour Party that wants to invest in them." David Cameron in response said: "The next election, when you have the guts to call it, won't be about Labour investment versus Tory cuts, it is going to be an election about the mismanagement of the public finances, the appalling deficit you have left and your plan for cuts."

On the one side, the voter power of the extensive public sector in the UK is substantial and if the Conservative party is seen as the party that will cut back and diminish the size of the public sector then there is a risk that they will lose this group.

On the flipside, as the publication by the Office of National Statistics of new productivity estimates for the public sector shows, "investment in basic public services" as Gordon Brown calls it is less an "investment" than charity. This data showed that despite a small improvement lately, productivity has fallen most years in the past decade. The ONS thinks that average public-sector worker's output in 2007 was 3.2% lower than in 1998. Contrasting this with the private sector doesn't make for good reading. Over the same period, again according to the ONS, "market" sector productivity rose 22.8%.

As David Smith points out in The Sunday Times this implication is huge - "By my rough calculations, if public sector productivity had matched the private sector, we could have had the same level of public service for almost £100 billion less than the £670 billion the government intend on spending this year. We would still have a public borrowing problem but it would pale into insignificance in comparison with the one we have."

To cut to the chase, the UK is planning to run massive budget deficits over the coming years and the place where this money is mostly going doesn't work very well. The choice that exists is either to confront this problem, or to postpone it. The responsible thing to do would be to confront it, as all the advice we have ever received about procrastination would attest to, but the easier thing would be to cover our ears and hope.

The battle lines for the UK election are a subset of the problems, ranging from financial to environmental, that we face around the world. As "T.N." from Limerick now knows, the importance of dealing with issues as they arise is very clear if he is to "fulfill his potential". The really practical issue is trying to establish incentives such that we are forced to deal with these problems as they arise. Unfortunately, in the political-economic sphere, the bigger the problems the less the incentive to start sorting.

There's nothing to match curling up with a good book when there's a repair job to be done around the house.