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Posts Tagged ‘economics’

Economics (still) don’t matter

[An updated version of a post from 2012 which first appeared here.]

Economics don’t matter in this year’s election.

At least, they don’t matter to me.

There are smart people who think Hillary’s economic plan is better for America than Bernie’s.  There are smart people that think Cruz’s’s plan is better.  (Of course, Trump has no plan.) We have some idea of what a Democrat as president would be like, and with Obama at the helm the economy has improved greatly since the Wall-street induced recession of 2008, even with an obstructionist do-nothing congress.  But maybe you think a Republican could do better.  Who knows?  I don’t really know as a fact which candidate would be better, from an economic standpoint.  (Except for Trump.  Trump would be a disaster by any measure.)

And let’s be honest.  You don’t know who would be better, either.

Oh, there are a few people who claim to understand the economic issues involved.  But let’s face it, “experts” can’t really pick stocks better than monkeys or dartboards.  Why do we expect the American economy to be any more tractable?  In the language of mathematics, the economy is a chaotic system.  Any small change in policy is likely to produce unpredictable results.  So when you pick a candidate based on “economic principles” you’re really just saying “I believe this candidate’s meaningless economic rhetoric more than the other guy’s meaningless economic rhetoric.”  If you have a PhD in economics, maybe I’ll give you the benefit of the doubt…but if you’re a truck driver, or a doctor, or a waitress, or a welder, then your ideas about the economy are probably total bullshit.

I am a physicist.  My ideas about the economy are bullshit.

Ever play one of the Civilization computer games, such as Civilization V?  If you have, you see how complicated and interconnected every decision is.  You have to juggle money, and the happiness of citizens, and threats foreign and domestic, and culture, science…the tiniest decisions can have huge ramifications, and no monolithic blanket ideology will get you to the promised land of victory.  It’s a balancing act.  Sometimes you have to raise taxes.  Sometimes you have to cut them.  Sometimes you increase education, sometimes you build infrastructure, sometimes you go to war, sometimes you seek a diplomatic solution.

If the pundits are to be believed, being president is simpler than this.  Just drink the Flavor Aid, follow the party line, and everything will be great.  Being president is as simple as doing everything that Rush Limbaugh (or Michael Moore) says.

I don’t buy it.  And if you’re honest with yourself, you won’t either.  Just say it to yourself: “I know nothing about economics.  I know nothing about economics.”

Why is it that people who admittedly know nothing about chemistry, poetry, physics, differential equations, music theory, pottery, animal husbandry, statistics, number theory, ancient history, modern Japanese culture, biology, leatherworking, genetics, Shakespeare, phonetics, linear algebra, astronomy, geology, philosophy, music history, Greek, marketing, calculus, modern history, evolution, quantum mechanics, medicine, world religions, and engineering, think that they know anything about complex economic issues?

(Not you, Ken Rogoff.  I know you know economics.)

Why is it that people who are ignorant of 99% of the world’s body of knowledge still have strong beliefs concerning tariffs or debt ceilings or free trade agreements or progressive taxes?  Let me be frank: if you don’t know what something is, you have no logical right to an opinion about it.  (Do you think that decoherence is sufficient to explain effective wave collapse, a la the Copenhagen interpretation?  Or do you feel that, ultimately, some non-local theory will gives us the loophole we need to sweep Bell’s Theorem under the table?  I didn’t think so.)  Just once I’d like to see a fry cook from Burger King say, “I have no opinion regarding stimulus money…I don’t understand all the complex economic concepts involved…but you know, the Thirty Year’s War was less about Catholic/Protestant bickering and more about the Bourbon-Habsburg rivalry.”

Economist John Maynard Keynes

If you don’t know who I am, then why do you even pretend to know the first thing about economics?

So.  The economy shouldn’t matter in your voting decision.  So where does that leave you?

Well, what’s left are social issues.  Issues like civil rights for the LGBT community, civil rights for women, civil rights for immigrants, the failed war on drugs, the continuing (attempted) theocratization of America, and the stranglehold that the vile NRA has on our political system.  I can’t in good conscience vote for a party that denies the fact of global warming (and here’s where I will play the “PhD in physics” card), the fact of evolution, the fact that the Earth is billions of years old.  The Republicans give every impression that they are the anti-science party, the anti-women party, the party of a solely-Christian America, the party of Wall Street.  If that is not the case, it is still true that very few Republicans distance themselves from such stances.

If you vote for someone, anyone, don’t hide behind the “I just prefer his economic policies” defense.  At least have the courage of your convictions.  Say what you truly are, and why you prefer the social ideas of your preferred demagogue.

I am a liberal, in the best sense of the word: the world could be better, and we have a long way to go.

What are you?

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[Note: this is the article that I wish Nate Silver would write.  He’d be so much better at the number crunching.  Of course, he’s also paid a lot more.]

I’m tired of hearing pundits spew their opinions about this, that, or the other.  Let’s face it, most people don’t know anything.

Of course, that includes me, but hey: this is my blog.

I’m using hyperbole; it’s true.  And yet in a country where 9% of people think that space aliens may have caused the disappearance of Malaysia Air flight 370; in a country where 55.56% of Supreme Court justices are completely ignorant about the First Amendment; in a country where sizable numbers of people believe in a 10,000 year-old Earth, and where numerous people doubt facts like global warming, evolution by natural selection, and the supremacy of Matt Damon…in such a country, how can you really take anyone seriously?

OK; I take Neil deGrasse Tyson seriously.  But he’s earned it.

People (of every political ideology) spew forth talking points without any facts to back them up.  Hell, they spew forth talking points without any justification at all.  I have liberal friends who are against GMO foods…even though there is no reason to think they could ever be harmful, and in fact have already saved millions of lives.  (Trivia question: how did Norman Borlaug save a billion people from starvation and subsequently win the Nobel Peace prize?  Answer: genetically modified wheat.)

On the other side, all kinds of nifty-sounding talking points spew from the conservative font, again without even a shred of justification other than “well, that sounds right”.  For example, people claim that less government is good.  Shrinking government is a goal of Tea Baggers.  “Democrats want more government, Republicans want less government…everyone knows that.”  It’s become a cliche, and people don’t even question it any more.

But this is the information age.  We don’t have to rely on our gut feelings, or even our supposed “knowledge”, to evaluate claims like “less government is good”.  We have data.  Why don’t people look at the data and then make up their minds?

I’ll tell you why: because looking at data is hard work.  Let’s face it; most people just can’t do it.  Most people want to be told what to believe.  But I just got tenure, so I have some time.  Let’s try to get to the bottom of this.

It didn’t take me long to find this website, which has nifty (exportable) data on all kinds of economic indicators.  Hey, look, the USA is ranked 12th in economic freedom out of more than 165 countries.  Yay!  We’re doing OK.

What about the size of government?  This is harder to quantify, since it means different things to different people (for example, many Republicans want to “reduce” the size of the US government without touching our defense budget, which is a little like trying to lower world sea levels by draining the Mediterranean Sea).  However, the indicator “Gov’t Expenditure % of GDP” seems pretty good to me.

How does the USA do here?  Do we have a “bloated, huge, nanny state?”  Our spending is 41.6% of GDP.  This makes us rank 47th in this indicator, so about the 72-percentile.  We have a “bigger” government than about 72% of the countries on the list.

Who’s ahead of us?  The supposed “socialist” states are (Norway, Sweden, Findland, Denmark) of course.  Everyone “knows” they are entirely nanny states.  Also: France, the UK, Germany.  The usual suspects.  Liberal, bloated, big government monstrosities.

But also: Cuba!?  Libya!?  Bosnia!?  Iraq!?  Malta!?

Maybe Cuba fits well into the narrative.  Cuba is a Communist country, so of course the commies have huge governments.  (I personally think Cuba is an outlier, since its GDP is pitifully small).  But what about other Communist states?

Hmm.  The narrative is starting to break down.  China’s government spending is about 23.9% of its GDP, almost half the size of the US.  The commies in red China are spending half of what we spend.  Vietnam spends about 30.9% of its GDP.

The talking point that the USA has become a “bloated nanny state” doesn’t hold water.  We’re in the top one-third of spenders, it’s true; but our defense budget is Brobdingnagian to say the least; if you plotted “non-defense government spending as % of GDP” our rank would be much lower.  (Note: I lack the skills to do this…feel free to do so yourself.)

But all this is distraction.  Ultimately, I don’t even know if big government is inherently bad or good, and more importantly, you don’t either.  Admit it.  You’re just guessing.

But we don’t have to guess.  We can try to understand the data a little bit more.

It didn’t take long for me to stumble on the cute Where-to-be-born index, a kind of “happiness index” which takes multiple factors into account like quality of life, health, economics, and so on, in order to rank countries based on where you’d prefer to be born.  (Admit it: you’d rather be born in Australia than Bangladesh.)  So hey, I know how to use Excel: let’s plot Size of Government vs. Where-to-be-born and see if there’s a correlation!

Correlations

Firstly: there’s not much of a correlation (the R^2 value is only around 0.17).  This is not surprising; the size of government has little to do with anything.  (It certainly shouldn’t be the entire frakking basis for a political movement.)  But what correlation there is, is positive, meaning that as governments get bigger, people tend to get happier.  All the Viking countries are in the upper right.  And those Scandanavians are doing well, dammit!

Some countries stand out.  Russia and China are lower and to the left of the USA, meaning they have smaller governments (is that surprising?) but are also more miserable.  Cuba, though, is a huge government spender…why is that?  Also, what’s the deal with Singapore?  They’re happy and (apparently) almost an anarchist state.  Tea Baggers take note: emulate Singapore.

The main idea I want you to get out of the graph is this:  there’s a lot of noise there.  You can’t really draw any conclusions.  If you want to say that “Big Government Bad!” in the same way that Tarzan says “Fire Bad!” you’d better have some data to back up your claim.  And finding such data is, well, hard work.  Good luck.

And now I’d better get back to studying something I know about: physics.

 

 

 

 

 

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