Conservative Fiscal Debate

A friend posted this on Facebook today which lead me to craft a response. It ended up getting me all worked up so I felt I should post it here instead.

The premise is an article from Daniel Klein on The Wall Street Journal arguing that all Liberals are silly cry babies who need to shut their mouths and follow along with the brilliance of Economists. In the article he cites a study for Zogby International survey that he and Zeljka Buturovic printed in the May issue of Econ Journal Watch, which conveniently enough Mr Klein is the editor of. (I will also note that the Wikipedia page for Mr. Klein is curated by Mr. Klein which is a violation of Wikipedia policy, but that’s just me being a meanie.)

Back to this groundbreaking survey of 4,835 American Adults which is clearly an excellent representation of the 260+ million Americans in 2008 USA. Here are the questions that Klein and Buturovic used to lead to the cleverly titled WSJ Article – Are You Smarter Than a Fifth Grader? (Because 5th graders have these questions down pat…)

1. Mandatory licensing of professional services increases the prices of those services (unenlightened answer: disagree).
2. Overall, the standard of living is higher today than it was 30 years ago (unenlightened answer: disagree).
3. Rent control leads to housing shortages (unenlightened answer: disagree).
4. A company with the largest market share is a monopoly (unenlightened answer: agree).
5. Third World workers working for American companies overseas are being exploited (unenlightened answer: agree).
6. Free trade leads to unemployment (unenlightened answer: agree).
7. Minimum wage laws raise unemployment (unenlightened answer: disagree).
8. Restrictions on housing development make housing less affordable.(unenlightened answer: disagree)

via Daniel Klein: Are You Smarter Than a Fifth Grader? – WSJ.com.

All examples above are heavily weighted in favor of making conservatives look like geniuses since everything is slanted against government regulation. Of course in Economics the most important virtue is the miraculous ability of the Free Market to perfect itself on the fly. Therefore all of these questions are setup to favor the Free Market world view.

If we have to frame all of this in terms of the mighty word of the Economists lets be sure to put the words of the OG Monetarist himself Milton Friedman. When he talks about the social responsibility of business “to use its resources and engage in activities designed to increase its profits…(through) open and free competition without deception or fraud.” Its that whole ‘deception or fraud’ part there that throws a whole lot of nastiness into the mix huh? Of course we can trust businesses to police Greed since it is only individuals who succumb to that Sin, right?

<cough>Enron.</cough>

I especially enjoy to subtle religious connotation with the use of ‘unenlightened’.

Deeper Look at the Questions:

1) Mandatory licensing of professional services increases the prices of those services (unenlightened answer: disagree). Yes the old Price versus Cost ambiguity. Too bad most normal people look at price and cost as the same thing leading to a bias here for liberals who tend to look at things more holistically and thus get stumped by the slick slight of hand or tongue in this case. Having all food workers qualified to handle food reduces the chance of me getting sick, thus reducing the cost of me suing that business. See also doctors, stock traders, or commercial truck drivers.

2) Overall, the standard of living is higher today than it was 30 years ago (unenlightened answer: disagree). What an awesomely vague question. What ‘standard’ are we talking about? The fact that average wages continue to fall while inflation continues to rise is what most liberals are concerned with.

3) Rent control leads to housing shortages (unenlightened answer: disagree). Odd that the first rent controls where enacted because of housing shortages during WWII. This is an incredibly ambiguous question and can easily be argued either way.

4) A company with the largest market share is a monopoly (unenlightened answer: agree). Another very ambiguous question here by using ‘largest market share’. Part of the definition of being a monopoly implies that said company does indeed have the largest market share. For an Economist this answer should be – ‘depends on additional factors not presented in this question.’ So an answer of ‘disagree’ should be just as uneducated.

5) Third World workers working for American companies overseas are being exploited (unenlightened answer: agree). Again so ambiguous that answering anything but ‘depends’ is the wrong answer. There are Third World workers working for American companies who are being exploited. Lets also mention that ‘exploited’ requires definition here as well.

6) Free trade leads to unemployment (unenlightened answer: agree). Huh? When all those manufacturing jobs went to China over the last 20+ years the factories that closed didn’t cause unemployment? Again ambiguous.

7) Minimum wage laws raise unemployment (unenlightened answer: disagree). Another biased question. It only leads to unemployment if employers were exploiting workers in the name of profit requiring regulation of minimum wages to ensure that American companies are not exploiting American workers.

8) Restrictions on housing development make housing less affordable.(unenlightened answer: disagree) Yes once again the Ambiguinator strikes again this time in the guise of ‘affordability’. Sure if there are no restrictions on housing development then the initial cost of building a home will be lower. However once it is discovered that the developers missed a proper soil impact study and all the concrete pads crack and shift after 5 years leading to a lawsuit that settles out of court for the initial homeowners that savings is wiped away. How about the longer term effects of resource management?

In fairness to Mr. Klein I hate Economist and Economics with a fervent passion. The ‘science’ of Economics is riddled with convenient biases in favor and support of Free Market policy. If I were able to live on the assumptions Economists take for granted I would always be buying everything at the lowest cost possible and only when the supply and demand for said good were in total equilibrium.

To me this article and study are a great example of how well Conservatives and the Right are at framing the conversation so that they win. It does nothing to increase or enhance debate other than to stick out your tongue and blow a giant raspberry. Mr Klien closes with this cherry:

Adam Smith described political economy as “a branch of the science of a statesman or legislator.” Governmental power joined with wrongheadedness is something terrible, but all too common. Realizing that many of our leaders and their constituents are economically unenlightened sheds light on the troubles that surround us.

Fantastic way to close here. Yes the current economic disaster we are experiencing is not because of corporate greed. Its because those silly uneducated liberals keep putting up regulation that forces corporations to find other ways of being greedy. This reminds me of Sara Palins recent remarks about the Deepwater Horizon Accident being Environmentalists fault because they force oil companies off of wildlife sanctuaries. Following this reasoning it sounds like we should just let the corporations run the government, Facism FTW!

My proposal is that we come to terms with the fact that the world is not black and white, that the Free Market does not exist, and that we use a mixture of Market Economics with a Humanistic approach to viewing the world. Life is more than Profit?