Wednesday, July 22, 2009

The Economy: "Feeling" Our Way

A Libertarian reader recently sent me a link to a blog post by FoxNews commentator Radley Balko in which he invites readers to state what their limits would be on “size, cost, and limits of government.” What specific number, Balko asks, should be the maximum allowed for tax rates, inflation, federal spending as percentage of GDP, and so on?

The question itself illustrates one of the biggest problems facing the Obama administration—or anyone else who tries to get things done in Washington: the ingrained American cultural habit of “thinking” emotionally.

Let’s use an analogy to illustrate why this is a ridiculous exercise. Suppose when they were building the first space shuttle, NASA asked the American public—who, after all, were footing the bill for the project—for similar input; for example, “What kind of fuel should we use in the boosters?” or “What materials should we use for the heat shields?” And most importantly, “What is the maximum number of dollars we should spend on the program before pulling the plug on it?”

Had such questions been asked of the general public, would NASA have received any meaningful answers? And if they had, should the progress of the human race have hinged on the collective opinions of a handful of ordinary citizens who know little or nothing about physics, materials science, or human anatomy?

Ah, you might say, but the economy isn’t rocket science.

In a way it is. Both physics and economics consist largely of nonlinear patterns of progression, which the human brain is not equipped to instinctively understand. This is why so many people get into trouble in terms of their own personal finances—they simply don’t feel the effects of compound interest rates, for example. The human brain needs sophisticated training in mathematics to account for the effects of time on numbers—and only specialists have that knowledge, just as only specialists know how to build a space shuttle.

How am I supposed to know how much is too much when it comes to, say, Medicare? As an individual citizen whose expertise is in psychology and education, I don’t even have a good feeling for what the price of bread should be. Like everything else in the world of economics, the price of bread—and of Medicare—can only be judged in terms of many other variables. Economics, in other words, is relative—and when it comes to the big-ticket items, prices are relative to economies in other countries, which fluctuate on a minute-to-minute basis. It takes sophisticated computer technologies and the experts to run them even to make educated guesses.

In response to Balko’s challenge, one reader commented that “106 trillion is a scary number.” Well, yeah—especially since the unaided human brain can’t begin to conceive of numbers in the trillions. That’s why we need to rely on specialists who have the mathematical skills, knowledge of history and economics, and access to computational tools to make informed decisions. In other words, we have to trust the experts.

Now there’s a scary concept. How do we know whom to trust?

The answer is, we don’t always know. But as a nation, we elected a well-educated man with good communication skills to assemble teams of experts capable of addressing particular problems. We elected a body of legislators with the collective responsibility of working with him to achieve our national goals. Now I suggest that we give them a little time to do their jobs without constantly having to respond to ignorant questions and objections from people who confuse thinking with feeling.

It’s one thing to try to make the intellectual effort to be informed. It’s another to assume that any one of us has the expertise to pass absolute judgment on matters of enormous complexity about which we have no specialized training. From the economy to education to global climate change, our national leaders are dealing with problems about which few of us have in-depth knowledge. A little humility would be in order here.

I suggest that, in matters about which we have no expertise, we withhold judgment and encourage others to do the same. Later, as we are doing with respect to the last president and his administration, we can analyze results. But for now, let's avoid pooling our ignorance and trying to micromanage what we don’t understand.


Jody said...

You've missed the entire point of the exercise it seems. Balko wasn't asking people to micromanage government (per your way off base shuttle analogy)or to become completely and utterly involved in every decision that government makes, and grind it to a halt. Rather his was a question surrounding policy at a philosophical and economic level to spur debate among disparate opinions. For example, I imagine he would be willing to outline where he believes the line ought to exist on government spending on education. But for the Liberals or Progressives out there, where does that line exist in principal for them? Is there a point, for someone who believes that Government can be a positive agent for change and ought to be the mechanism employed to affect change, where they do say "Whoa- that's too far. It exceeds the mandate of our Government at the Federal level/State/local level and ought not be their concern". It's an exercise in thought an policy/philosophical beliefs, not emotions as you accuse.

Whether or not you believe the Government is accountable to the people on all decisions or that we should just sit back and trust the fine men and women of our government is an entirely secondary question.

Anonymous said...

You believe that YOU are rational and Balko is "emotional?"




Anonymous said...

once again we see an all too common elitest liberal premise, that the average american is too stupid and ignorant to understand the vast complexities of the economy and of the government. and because the average american is so dumb, he must be saved from himself by the benevolent and all knowing liberal politician, who knows what is best for him. he must blindly trust that his intellectually superior leaders will always do what is in his best interest and he must never question their choices, for if he does, he is micromanaging them on subjects that he cannot possibly understand.

get real citizen jane. the average american is not dumb. and the average american is fully capable of understanding how the government and economy works and what a trillion dollars is. so step down off of your pedestal, citizen jane. i know you would like to think that you are some how more enlightened then the rest of america because you adhere to liberal concepts. however, you are not, and your poorly written blog post complete with badly written metaphors and unsupported assertions highlights that fact.

MichaelB said...

Wow, you did miss the point. I don't see where you addressed any of the questions stated by Radley.

Ryan Young said...

Hi, Citizen Jane.

I think what Radley is asking for is something like this: the U.S. economy is currently a slightly under $14 trillion. The federal, state, and local governments combined account for roughly 40% of that. Given what you would like the government to do and not to do, give a ballpark estimate -- in number form -- of what you think an appropriate level would be. More? Less? Are we right about where we should be?

You care enough to blog about politics, and are smart enough to do it well. Why not a attach a number to what you feel is right?


M Blaze Miskulin said...

I was made aware of this post from a link in Radley Balko's blog.

While I certainly don't agree with everything that Mr. Balko writes, I believe you have mischaracterized his intent in this matter.

As I understand it, his question is not directed at the average citizen. It was directed at liberal and left-leaning bloggers--people who are outspoken public proponents of a specific range of political thought.

These persons (of which, I assume you belong) are those who present themselves as an educated, informed, and active voice supporting either Obama specifically, or his political viewpoint generally.

You are not an "average citizen" in this regard; you are a public pundit.

Mr. Balko puts himself out in the public forum as an informed proponent of libertarian values, he is asking for a response from his counterparts in the liberal/democratic camp.

His question is a very valid one: You are supporting a position. What are you willing to pay to achieve it?

Is your position worth $1 trillion? $10 trillion? $100 trillion? $1 quadrillion? $10 quadrillion? $100 quadrillion?

At some point, the cost must outweigh the benefit. Where do you, as a political commentator, place that threshold?

While nobody expects an exact dollar amount, and everyone with a degree of intelligence understands that there are mitigating factors in any political equation, there must be a point where you say "that's too much to pay". Those who say "the goal at any cost" are, by definition, extremists. I doubt you would place yourself in that category.

So... To repeat the original question: At what point (in dollars and/or civil liberties) do your goals become too expensive?

Anonymous said...

Citizen Jane

I would bet that when you were doing your very difficult education degree, you complained bitterly that you had to pass all that hard math and science stuff, didn't you.

Anonymous said...

If you can read, and I use the verb in it's highest and most meaningful sense, then you too can understand economics in only one lesson.

I should warn any persons who support the government - understanding this simple and essential science which is the foundation of our modern world and all of the conveniences and luxuries and wonders it contains - will destroy your current worldview, politics, and personal identity. If you wish to remain blissful - don't read and most definitely don't try to understand that book. If you do decide to educate yourself, prepare yourself for some soul trying stress as you begin to grasp the meaning of the national debt, inflation, the budget, etc.

chris bray said...

My god, the "team of experts" argument. The advocates and planners of the Iraq War were a highly educated "team of experts," starting with William Kristol (PhD, Harvard) and Frederick Kagan (PhD, Yale). They built a towering disaster.

Citizen Jane, you might enjoy Ron Robin's book, "Building the Cold War Enemy." It's about the highly trained experts at RAND and elsewhere who worked to parse the data sets that would give them the key to an American victory in Vietnam. They used cutting edge social science concepts to determine the precise amount of violence that would have to be applied against the North Vietnamese and their southern supporters until, following the script established by rational actor theory, they gave in to American pressure.

Also useful: "Seeing Like a State," by James Scott, the historian of Southeast Asia. He writes about, for example, the team of technocratic experts who organized collective farms in the Ukraine.

It's almost impossible to exhaust the list of disasters caused by the hubris of the "team of experts." A little historical knowledge might help.

Anonymous said...

"A little humility would be in order here. "

Seems you are really calling for false pride in ones ignorance and blind dependence upon other people to decide how you shall live your life.

If that works for you, that's great and all, but as an autodidact polymath and genius who understands education, climate change, and economics I'd like to have the option to opt out before your trusted experts cause a famine as they did in China, the Soviet Union, and Zimbabwe. Influential academics are now discussing the "need" to shut down agriculture in order to prevent air pollution. If you wish to starve in order to breath easy - go ahead but count me out.

Gabriel said...

I don’t even have a good feeling for what the price of bread should be.

But you do, if you just stop to think about it. Perhaps not down to the cent, but you have a good idea that if you see a loaf of bread on sale for $0.13, there's probably something wrong with it, and if you see a loaf of bread offered at $239.95, you're just plain not going to buy it.

And the same is true of the economy. You may not be able to pin any of Balko's questions down to a very narrow range of exactly-right, but you can probably come up with some boundaries at which your intuitive sense of rightness rebels.

For example, his first question has to do with progressive taxation. Would your internal rightness meter be OK with a taxation scheme in which the richest 10% of citizens paid all of the country's taxes? If so, what about the richest 1%? Or the one million richest individuals? What if we just confiscate half of everything owned by the richest guy, and then the second richest, etc until all the bills are paid?

At what point does your intuitive political and economic sense say "nuh-uh"? That, I think, is the question he's trying to ask.

lonely libertarian said...

Not a regular reader of yours, but I've got to , don't some of Radley's questions demand answers by thinking people. Maybe it's tough to discuss government spending in regards to GDP, but what about wealth redistribution? If you're in favor of redistributing wealth, how far would you go? And in a similar vein, what about tax rates? Is 60% okay? 90%? 100%? These are the sorts of questions each and everyone of us should have good answers for.

thorn said...

I'll echo the chorus: you've avoid the question completely. One would think someone with a background in psychology and education would easily discern a question, and answer.

Then again, in this era of "new math" and "every behavior is a medical condition treatable by medications" perhaps it's not surprising after all.

In any case, to put it simply: At what point would you believe the govt has gone too far with various programs?

Did Lincoln go to far, when he jailed people without trial for interfering in his policies?

Did FDR go too far, when he created the New Deal?

Did Stalin go too far, when he vanquished millions to the wastelands?

Did China go too far, when they began forced sterilization?

At what point will the Pres and Congress go too far? When the national debt takes 10 years to pay off? 20 Years? 50 Years?

What's your breaking point? Where will YOU draw the line?

That's the question.

Anonymous said...

I guess my question is, "If most people aren't that bright, then how can we be certain they (I certainly didn't vote for him) elected the right man in Obama?"
Don't stupid people make stupid decisions?

lynch said...

Most people I know with financial trouble got there by "thinking emotionally". They know they have X dollars to spend every month, and can't afford certain items. But they want (emotion!) things they can't afford and end up going into debt or other silliness to get those items. This is the main reason people can manage a company's finances without issue and have problems with their own.

Regarding compound interest.. same idea. One can be shown a table or use a simple calulator webpage to show how much their savings can grow over time and how the exponential nature of compound interest pays off hugely over time. But the small gains they see initially don't feel (emotion!) like much so they give in to the urge to spend those savings.

videre said...

How can asking for specific factual data be construed as thinking emotionally?

I laugh at this: " A little humility would be in order here."
Actually...I shudder.

K-Tron said...

The degree of subservience, credulity, and uncritical acceptance on display here is astonishing.
Just a few quotes:
"In other words, we have to trust the experts."
"Now I suggest that we give them a little time to do their jobs without constantly having to respond to ignorant questions.."
"It’s another to assume that any one of us has the expertise to pass absolute judgment on matters of enormous complexity about which we have no specialized training."
The very concept of citizenship in a democracy REQUIRES that we ask every possible question of our elected leadership. We don't just delegate the power to them and say "do what you will." We owe it to ourselves and our fellow citizens to grill our leadership, to hold their feet to the fire at every point. Anything less is ceding the consent of the governed to the governing.

And what would you say if you had lived in the 1920's and were faced with a government program to sterilize 'lesser' races. Eugenic sterilization programs actually happened in the Unites States. (NB: I not saying at all that is what the healthcare bill intends) What would your response be? "Well.. We need to leave that to the expert on racial theory. We have no business opining on matters we laymen cannot understand."

These are sheepish bleatings.

Idna said...

Well, you sure rattled a few cages with your post, Jane. So let me put my 2-bits in.

Let's talk about 'trusting the experts.' Obama is no expert in economics, you have to admit that. He has been on the 'taking end' of tax payer money with his community organizing job and taking government grants when he sat on that school board with Ayers. So he knows all about using other people's money. But has he ever created a job? Has he ever added anything of value to the economy?

OK, so he will rely on so called experts. Obama want 'yes men' around him. He has an idea he want to rush through, come hell or high water. Will he listen to people who disagree with him? Sure haven't seen any signs of that yet. The Dems refuse to even discuss any Republican ideas.

We saw what his administration did to one inspector general who, doing his job, uncovered misuse of gov't funds by an Obama buddy. He was fired.

So trust, you say. Show me a government run program that works well, is not in the toilet financially or going bankrupt, isn't full of waste and fraud ... and then we'll talk about trusting the government to take over health care.

KBCraig said...

I didn't know that compound interest was too complex for the human mind. I think it was the third grade when I came across the puzzle of taking one penny on the first day of the month, then doubling than the next day, then doubling that the next day, etc., until the end of the month.

I was astounded at how rapidly numbers could multiply, even as I was learning my multiplication tables. From that moment onward, I instinctively understood compounding.

Even I, a math-phobe, can grasp such a simple concept.

Then again, I'm not hampered by degrees in Psychology and Education.

Billy Beck said...

Shorter Jane: "Let the best and the brightest have their way."

It is *amazing* to watch the Left cop this attitude, and that's all it is: attitude.

Rhayader said...

Uhh, pretty weak answer. More specifically, it wasn't an answer at all.

I don't see how Radley's line of questioning can possibly qualify as "emotional". It is also not presumptuous to discuss how our money will be spent, particularly when that spending goes toward increased federal jurisdiction and influence. Rather, it is your answer -- essentially that we should just trust whatever the government has planned for us -- that lacks humility and perspective.

Brian S said...

“What kind of fuel should we use in the boosters?” or “What materials should we use for the heat shields?” And most importantly, “What is the maximum number of dollars we should spend on the program before pulling the plug on it?”

These questions are not of the same kind.

No one assumes that the average citizen is able to answer technical questions about project specifications.

We DO, however, assume that average citizens are competent to decide how much money to spend on a project. If we don't, democracy makes no sense and we shouldn't have a democracy. If the average citizen is not competent to determine the correct amount to spend on different policy priorities, then their vote is of zero value and should be ignored. How does a citizen who can't answer this question even begin to evaluate whether their congressional representative has done a good job? If they can't answer this question, they cannot perform even a cursory review of the work of their representative or of the proposals of different candidates for office, and shouldn't be allowed to vote.

As an individual citizen whose expertise is in psychology and education, I don’t even have a good feeling for what the price of bread should be.

This is absurd. OF COURSE you have a good feeling for what the price of bread should be.

Every time you walk into a store and buy bread at the posted price, you are saying, "Yup, that price seems about right to me."

If you walked into a store and they wanted $25 for a loaf of Wonder Bread, you'd stop and say, "Nope, that price doesn't seem right to me," and you'd get bread somewhere else.

Sysiphus said...

Did you feel this confident trusting the experts when Bush/Cheney were the experts? Personally, the idea of just trusting them scared the piss out of me.

If you didn't trust them, then your argument is either lying to the world, or to yourself. If you did trust them, then you have significant rational deficiencies and should not chastise anyone else as thinking irrationally.

Naginata said...

Sorted in order from least logical to most logical, for your benefit:

Liberals: We've got to do it, I don't care if we can't!

Republicans: We won't do it, even if we can!

Libertarians: We can't do it, I don't care if we should. (Also, we shouldn't.)

Anonymous said...

Rational perspective?

Yeah, I want to leave all the important decisions Obama because as Radley puts it in his response to you - "so we should put our faith in Barack Obama, I guess because getting elected president magically infuses you with the wisdom to run the economy, or at least the smarts to pick the all-knowing advisers who can".

That worked out well with Bush, didn't it.

I guess blind faith in "liberal" President's is good, but not "conservative" ones.

jeeze, unbelievable.

Anonymous said...

The problem really is with the premise of Radleys’ question - that everyone at some point will define an upper limit to the size of gov’t.

The flaw in that is that to a dedicated progressive/liberal/democrat/whatever there is NO upper limit and to ask one of these to consider an upper limit puts them beyond their limits of ability.

All they really care about is that “their side” (the good)is the one growing government - not the “other” (the bad) side. Ergo, you would never see them defending Bush, but they will defend Obama (or any progressive/liberal/democrat/whatever) blindly.

J sub D said...

But as a nation, we elected a well-educated man with good communication skills to assemble teams of experts capable of addressing particular problems. We elected a body of legislators with the collective responsibility of working with him to achieve our national goals.

So you were satisfied letting GWB and a GOP congress "working with him to achieve our national goals" from Jan 2001 to Jan 2007?

How'd that work out for ya?

Anonymous said...

You describe your blog as, "Thoughts and comments from a rational perspective on political, social, and cultural events." Yet you fail to add commentary, thoughts and certainly a rational perspective... your ultimate argument is to shut up and follow orders. You dismiss the very idea of questioning, adding commentary and thinking about the issues that will affect us for generations to follow.

Based on your arguments, the silly peasants of the world are smart enough to know who to elect, but are so stupid that they 'confuse thinking and feeling'. Your approach to government trust is same thinking that got the Patriot Act passed, turned a blind eye to the errosion of our civil liberties over the last 8 years and got us in to the debacle that is Iraq (but the experts said...).

But then again... Bush BAD, Obama GOOD. Therefore we should only question the evil Republicans and TRUST that the Democrats are ALWAYS looking out for our best interest.

Sue said...

Seems to me the main issue here is "how much responsibility can/should individuals take for the actions of government?" If we believe that we are all individually and collectively responsible for the decisions of government, Mr. Balko's question is quite reasonable and appropriate. It's a version of the old "if you had $100 how would you allocate it?" question. If, on the other hand, you believe that we should be involved only to the point of electing our representatives and letting them make the "best" decisions on our behalf, then Jane is correct that we have to trust the "experts". I don't think that is what she would advocate, though. As a writer who encourages thoughtful participation, she should appreciate the efforts of Mr. Balko and others who stimulate involvement and debate.

The Tarquin said...

Wow, your post sure brought the folks out of the woodwork, didn't it? And I'm heartened to see that, for the most part, they're even civil. When you told me you were getting a lot of traffic, I was expecting a total political firefight. Most of what's being said here is downright courteous compared to some political discussions on the 'Net.

I just wanted to highlight that, while I see the point you're trying to make with the shuttle analogy, I think there's some conflation going on. Basically you're taking two kinds of decisions, technical and political, and forcing them together in unholy union.

The question of what material to build the heatshield out of is not the people's to decide. It's a technical question that NASA employs engineers to address. The question of where in our national priorities (and hence national budget) the space program should fall most definitely IS for the electorate to decide. Ours is a government BY the people. And that means that the people are the proper entity to decide which goals the government pursues.

So how important the space race is (and hence how much we spend on it) is definitely our job to decide.

Besides, everyone knows they should have made the heatshields out of duct tape. Fixes EVERYTHING. :-D

Anonymous said...

What an uninformed, irrational piece of drivel. You are clearly not educated enough to even for an opinion yet alone expess said opinion. If you lived in Germany in the 30's I'm sure you would be proud to have a great leader like Hitler in which to instill all your confidence. Shockingly poor commentary on your part.

Rhayader said...

Way to channel your inner Godwin, anonymous. And right after The Tarquin complimented the discussion for its atmosphere of civil disagreement.

a different Brian said...

this is great! A true Emily Littella moment!

thanks, Jane!

Sean said...

I knew this was going to be a completely useless post as soon as she said "FoxNews commentator Radley Balko." Balko is no longer a commentator for Fox News, hasn't been for a while. A better description would be commentator/editor for Reason Magazine. Nice attempt at a slime though...

Anonymous said...

I feel both sad and stupid for having wasted 2 minutes reading your absurd response to Radley's question.

Peter said...

I immediately noticed your need to use code words to describe Mr. Balko: FoxNews commentator. Not as a blogger, where this was first posted, not affiliated with, where he is most noted, but Fox News.

I then expected a dozen paragraphs of driveling stupidity, and that's just what I got.

Anonymous said...

"One can be shown a table or use a simple calulator webpage to show how much their savings can grow over time"

Yeah and then the dot com bubble comes along and blows away all of that growth, and much of the principal. Then your stuck thinking, "damn, should have taken a trip to Cancun before Mexico became Beirut."

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