Wednesday, April 1, 2009

Simplicity in Action: A Townhall Exchange on the Economy

For those who think it is unfair that conservatives are characterized as having a simplistic unrealistic view of the economic world, I give you this typical exchange from Townhall:

Charles LPKY: "A person is in debt to where they are at the point where they can no longer pay their debtors....Should this person borrow and spend more?"

Hal Donahue: "Depends on for what purpose doesn't it. Like you start a new job in a month at a salary where you can pay; this would be legitimate. Or go deep into debt to service existing debt while you finish up medical school."

Charles LPKY: "Does not depend on anything, just simple yes or no...The bottom line is when my house hold has bills, we pay them, we do not borrow money with interest to pay our bills. Credit got the US into the economic crisis we are facing, Credit will not get us out. In my house hold we cut spending to get out of debt, we only owe on our house now. The federal govt. is using credit to spend, and not worrying about the increase in the National debt.
Logic dictates to cut spending, cut programs, and pay off our national debt."

Sure Charles, only if "logic" excludes the very real possibilities, a few of which Hal pointed out, where the returns on a borrowed investment exceed the cost of that investment.

But this doesn't wash in Conservoland. All must be simple, black and white, yes or no. And as if to make my point even more clear, here comes Walter Williams with another perfect example:

"Do you believe that it is moral and just for one person to be forcibly used to serve the purposes of another? And, if that person does not peaceably submit to being so used, do you believe that there should be the initiation of some kind of force against him? Neither question is complex and can be answered by either a yes or no. For me the answer is no to both questions but I bet that your average college professor, politician or minister would not give a simple yes or no response. They would be evasive and probably say that it all depends."

There's your mainstream conservative attitude towards all our complicated moral and other problems: concerning onesself with all the facts and the relevant context is evasive. No wonder they have no answers for an ever-complicated world. Today is their day.


Troublesome Frog said...

When people ask why I prefer a bunch of technocrats at the Federal Reserve controlling our money supply rather than elected officials, this type of thing is pretty much why. People are bad at any reasoning process that conflicts with their immediate common sense instincts, and that problem just gets worse as you get into banking and macroeconomics. Even in the face of clear and unambiguous reasoning, the first instinct often wins out.

It's interesting to consider, but it makes perfect sense to me to trust elected officials with nuclear bombs but not with the financial system. Just about everybody has a solid intuitive grasp of the immediate and most important consequences of using nukes.

Luke H. said...

This CharlesLPKY guy would make a terrible businessman. Sometimes businesses have to risk bankruptcy to get a profitable product to market. You do what you have to for family, too. This guy seems so smug - so confident that he is in control. Life might hold some surprises.

Of course, the whole discussion is based on a faulty premise. The US is nowhere near being unable to pay debtors - the national debt is less than 2X income (GDP). The larger risk is that we are running out of creditors. But to pay the debt requires taxes, and these folks see taxes as an assault on their god.

ScienceAvenger said...

I agree Troublesome Frog. It seems clear that there are some aspects of society that are not best left to the constant judgement of the masses. I'd point to the Supreme Court as a good example. We all have decisions we'd like to see decided differently, but overall its hard to imagine the kind of idiocy we see in the other branches there.