Daily I read article after article that yells to me, and apparently me alone, the biggest earthly cause of our economic troubles in America and abroad. It’s not the greedy bankers of Wall Street; it’s not the inept politicians (come on… who elected these people after all?); it’s not that we aren’t taxing the rich enough or too much; it’s not the housing crisis; and it’s not monetary policy, which is way too loose. NO! These are but effects of the root cause of our economic maladies. If I were James Carville, I would say (In my best drawl), “It’s the lack of understanding about the economy, stupid!” And the fault of this rests clearly upon our parents and our schools and universities.
The protestors shouldn’t be camped out on Wall Street; they should be camped out on the lawns of America’s Universities! After all, many of these same protestors are direct products of the dribble, which constitutes higher learning nowadays, from our universities. I offer as Exhibit A, the article How the Death Tax Hurts the Poor by Steven E. Landsburg. Although I would agree with the basic premise that “death taxes hurt the poor”, how he gets there is through some truly insane logic. Let me paraphrase, ‘because we have a death tax, rich people consume more (i.e. buy airplanes & mansions); because of this, they consume more resources (i.e. metal and wood used to build); therefore, there are less resources for industry to use to grow, which means less jobs, which therefore hurts the poor.’ Did you get that???
There is sooooo much to take issue with here, but my biggest beef is with the thinking, which is ubiquitous right now, that the economic pie is static and therefore if one class of society takes from that pie, there is therefore less for someone else. THIS thinking is so resolutely wrong; I’m surprised I even have to argue this point. Simply examine the economic data at some point far enough in the past to avoid common cyclical patterns (i.e. one to several generations) and compare to today (even with our depressed economy). Look at Gross Domestic Product, inflation adjusted Median Income, Money Supply, or any other metric and you will see an overall increase in the size of the pie!
In other words, when Scrooge McDuck (that’s the greedy rich person) buys an airplane or builds another mansion, it is true, he does use more resources. However, when more resources are used, our economy finds/digs/drills/builds more to supply all the other Scrooge McDucks out there. And if our economy does this more and more, it will need to hire more to supply all the Scrooges out there. That means more jobs, more income, and a more vibrant economy. Again, the pie grows. This is Econ 101!
It would be one thing if this person was just some talking head buffoon with a blog (he has one here too). No, this is professor of economics at the University of Rochester in New York. Worse yet, he holds as proof to his illogic, the research of other professors.
I offer Exhibit B, GOP-style wealth distribution erodes equal opportunity, by Eugene Robinson, also from today, positing that because the top 1% income has grown so much more from 1979 to 2007 than the bottom lowest 1/5th, that it was evidence of the “stealing from the poor to give to the rich.” Mr. Robinson, who uses the pie analogy too, can be excused from his economic ineptness, he’s not a professor, he’s just a product of the American Education System.
Yes, there is much conflict and disagreement in Washington DC. But I ask how can you have a healthy debate about tax and economic policy with people who don’t even understand the economy? I’m praying that the Paul Ryan’s of our country stand up and educate the masses about basic economics as they help many of the understandably confused what ails our economy.
I think today (Saturday) is perfect to announce my plan: Occupy University! Here’s the idea, a mass of people, will dress in similar colored shirts on the lawns of our universities. We will sit around and consume resources (beer & pizza being the most favored), even though this WILL mean less of those resources for others. And we will not leave, until the university teaches economics to all Americans… Or, until the tailgate is over and have to go in an watch the football game.