A Degree In Economics+ 1 Dollar= A Cup Of Coffee

No one ever went broke underestimating the inefficiencies of government, such as why the Law of Economy (Ockham’s razor) is never a factor when bureaucrats get together on the topic of economics. Sure, more money can be thrown at it, with more committee’s committed to it, and more studies called for employing even more people to analyze it, when the “it” involves something so complicated, so convoluted in scope that even approaching a modicum of understanding would confer genius status, but is economics really that complicated?

I understand folks like Ben Bernanke, Tim Geithner, and Paul Krugman are smart fellows, equipped with the best degrees money can buy and prestigious colleges can offer, but look where that has gotten us. I wonder what Jefferson would say when told that today we need experts in congress, not citizen/politicians like he had envisioned, the cream of the crop from the colonies, men who had great personal economies and great successes in translating those economies to wealth and influence, but now leaders of industry are not enough, more academic pinheads are needed.

Almost 80 percent of lawmakers might need to crack open an economics textbook before the congressional recess ends, a new study on Tuesday suggests.

The vast majority of members lack an academic background in business or economics, according to a study by the Employment Policies Institute, a nonprofit group that takes a conservative stand on fiscal issues. Only 13.7 percent majored in business or accounting, and 8.4 percent have an economics degree.

“How many members of Congress have an academic background that provided them with a basic understanding how the economy works? The answer, it turns out, is not many,” the report concluded.

Is this really where we are now, where the majority of our leaders can’t understand the simple basics of budgets, money in/money out, not spending more then what you make, and the dangers of deficit spending without a friggin’ certificate on their wall conferring to them a doctorate of economics degree? Only Wharton graduates need apply now?

Que the gratuitous economist joke:

A mathematician, an accountant and an economist apply for the same job.

The interviewer calls in the mathematician and asks “What do two plus two equal?” The mathematician replies “Four.” The interviewer asks “Four, exactly?” The mathematician looks at the interviewer incredulously and says “Yes, four, exactly.”

Then the interviewer calls in the accountant and asks the same question “What do two plus two equal?” The accountant says “On average, four – give or take ten percent, but on average, four.”

Then the interviewer calls in the economist and poses the same question “What do two plus two equal?” The economist gets up, locks the door, closes the shade, sits down next to the interviewer and says, “What do you want it to equal”?

Isn’t the point being that whether it’s 2 plus 2, or $2 trillion plus $2 trillion, numbers can’t be fudged and the solution is pretty much the same?

I don’t think the problem is that not enough of our leaders don’t hold economics degrees, the problem is that not enough of them have had sufficient life experiences and sufficient training that goes with those experiences. Given the upbringing and background of our president, the codling and interference other people ran for him in his quest through life, his lack of real adversity (character builder) his lack of actual job experience, where he is at now and his attitudes should not be any surprise to anyone.

Maybe the problem lies in the people that vote these clowns in to office and the vetting (or lack of) that the media does on candidates. It is difficult for representatives to represent the folks when those selected don’t understand simple things like balancing a checkbook, putting off that vacation because the car needs new tires, taking that second job because piano listens for the kid aren’t cheap, and doing whatever it takes to pay off that credit card debt because it is your debt and can’t be sooped off to someone else or the next generation.

Character, integrity, and personal industry, these I hold much higher in esteem for an elected official then some sheepskin hanging on a wall. Somebody with common sense enough to realize how inefficient and destructive Keynesian economics has become, someone who sets the bar a bit higher and strives to emulate an Adam Smith, David Ricardo, the Austrian school, or Frederich Hayek.

And speaking of Hayek vs. Keynes:

Nice gun fire sound effects, now that is rap.

Comments are closed.

  1. Seattle Outcast

    At its core, economics is about as simple as it can get. It takes those “academic pinheads” to make it complicated (and generally wrong). In the long run most of them tend to over-analyze and follow things down their paths of illogical extremes.

    In it’s most rudimentary form, it works like this: 1) People will use their money in the way that appears to be the most advantageous to themselves. 2) People will always consider the short term over the long term. 3) Economics is about the individual, not the group.

    Keynes forgot all of these points, which is why his theories fail so consistently.

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  2. Seattle Outcast

    This is rather easy to figure out the why of it all. People who are highly educated tend to fall into the following categories:

    1) Academics who don’t do well with reality

    2) Those who aren’t really all that smart, but think that a postgraduate degree will convince others differently (this doesn’t apply much to the sciences)

    Both of these groups tend to think very highly of themselves, and, having never had to work with real money with real consequences for managing it correctly, think they can just toss money after all these “good causes” and there will always be more money. After all, it’s not as if they’ve ever actually had to work that hard to get their paychecks.

    If governments were comprised of people with a better grounding in the real world, they wouldn’t be pissing sway other people’s hard-earned cash on meaningless feel-good initiatives and programs. In other words, the guy that runs the local flower shop is going to do a better job with the state budget than a “poet” who teaches French history with his/her doctorate degree in classics.

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  3. bgeek

    If governments were comprised of people with a better grounding in the real world, they wouldn’t be pissing sway other people’s hard-earned cash on meaningless feel-good initiatives and programs.

    This would only work if there were real consequences for failure.

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  4. CM

    Isn’t the point being that whether it’s 2 plus 2, or $2 trillion plus $2 trillion, numbers can’t be fudged and the solution is pretty much the same?

    There are definitely some basic micro-economic formulas that all (or close to all) economists would agree on.
    But as I said in the other thread to a large extent I think the macro-economic policies someone would employ largely depends on what they are trying to achieve. None of the schools of economics have come close to a series of equations which mirrors reality. They all have significant issues with each other because they don’t believe ‘the other lot’ have got the end goal right. It’s a very subjective summary but one school is seeking to achieve a balance between wealth and equity in a society, whereas the other school is all about wealth, with the philosophy that equity is either irrelevant or will take care of itself. I can see the sense in both schools, but I also see flaws in both. But that’s about me, I realise that.
    On a personal level I could live much more frugally and pay off the mortgage much faster. But I want to enjoy myself AND pay the mortgage off. So I certainly don’t follow the best (rational) economic path. Does anyone?

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  5. trade_pro

    CM-

    There’s no problem with not paying off the mortgage but don’t coming looking for my money if you’re short because you wanted to enjoy your money and I was frugal. That’s not personal just what happened with TARP and what I see from people around me.

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  6. richtaylor365 *

    Following up on TP’s point, in a society where personal responsibility is not rewarded, and a lacking of it is not punitive then, not only will abuses occur, but the motivation to be responsible and do the right thing is stifled.

    Someone walks away from an under water mortgage (even though he can afford the payments) insults the guy who honors the legal agreement that he signed. We now have federal programs available that will do loan modifications for the irresponsible that bought more house then they could afford, insulting the guy who stayed in his smaller house knowing he could afford it and did not buy up. Worrying about all that credit card debt you ran up? Why, when you can declare bankruptcy and just walk away, saddling the credit card companies (and their still loyal paying customers) with the results of your avarice and greed. Can’t hold a job because you are lazy, can’t work with others or just don’t give a shit? No worries, the government will now pay you to sit around watching Oprah all day, for years. And for 51% of the folks, there is no responsibility to pay taxes at all, to invest and support this form of government that provides for folks like you. There is no real stick or the willingness to use it when personal responsibility is lacking. The profligate are bailed out too easily, which requires the honest folks to pick up the slack.

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  7. AlexInCT

    Following up on TP’s point, in a society where personal responsibility is not rewarded, and a lacking of it is not punitive then, not only will abuses occur, but the motivation to be responsible and do the right thing is stifled.

    THIS!!!! ^^^^

    I just this morning saw on the news that our government is thinking of a program to refinance mortgages for people on the brink of losing their homes, to help them out. They are trying to sell it as an economic investment. The argument is that lower rates will mean more money in these people’s pocket’s ergo stimulus. Work with me here.

    They might mean well, but these geniuses forget that most people unable to pay their mortgage right now are unable because they ARE UNEMPLOYED. Even a 0% rate is not going to help someone without income from employment pay anything, let alone end up with discretionary spending money of any kind to do anything that would stimulate the economy. Worse yet, they have done such a good job avoiding the inflationary problems – price of energy and of anything tied to it, from food to other consumables, are up almost 10% from where they where last year – that they have convinced themselves it doesn’t matter. People have no discretionary spending. I have felt the impact of this inflation myself, my money doesn’t go as far as it did before, and I make a lot of money. The backup plan seems to be for government to just buy up these homes, then rent it to the original owner until they are ready to pay for it themselves. Again, they miss the problem than unemployed people have no money.

    Then there are those that just are in dire straights because they either bought more than they could afford or after buying borrowed so much that they owe far, far more than their property is worth. Many of these people are simply figuring they are crazy paying this back. Unfortunately, these are the every people that any of these programs that these idiots are pushing are going to help: those that made terrible choices – whether they knew they where doing so or claim others talked them into it is irrelevant to me, because in the end they where the ones that pulled the trigger – are going to be rewarded for not doing the right thing.

    To me, when I see government programs to reward those that do wrong when I don’t – my choice to pay now to benefit later over instant gratification seems to even be punished – and end up paying for them, seems just outright wrong. And practically all government programs that are there to “help” serve those that make bad life choices and will because of that help continue to make more of those bad choices. Yet I am the one that is insensitive, if not outright evil, for thinking we aren’t doing anyone any favors. Note that i am not saying that there aren’t truly some bad luck cases, but they are the minority by far.

    Punishing those that do the right thing, even in the name of helping those that have problems or whatever other misguided quasi-religious social justice bullshit that these programs are sold under, is a slap in the face. I often wonder why I just don’t give in and make the wrong choices, then remember that unlike the progressives that feel entitled to everything simply by virtue of being born, that I still believe in all that old fashioned nonsense the left so likes to makes fun off. Fuck, I wish I had no morals sometimes. Life would be easer. I could have others pay for me.

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  8. balthazar

    Before CM goes on a rampage about the 50% of people dont pay taxes thing. Yes CM we know its only INCOME taxes they dont pay, they still pay payroll and medx2….

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  9. hist_ed

    On a personal level I could live much more frugally and pay off the mortgage much faster. But I want to enjoy myself AND pay the mortgage off. So I certainly don’t follow the best (rational) economic path.

    CM have you ever taken any econ courses? I don’t think any economist would say that aren’t being rational or are following a bad path. Economic theory does not say that people should always maximize their income. Economists recognize that money is traded off for other things and that people value other things. You value your lifestyle more than you value paying off your mortgage faster, therefore you are acting rationally and following the best path for you. At times I value ten year old scotch more than I value the $50 a bottle costs me. Almost Any economist would say that I am making a rational choice when I buy my favorite booze.

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  10. CM

    I’ve done a few university economics papers yeah (20 years ago now though).

    CM have you ever taken any econ courses? I don’t think any economist would say that aren’t being rational or are following a bad path. Economic theory does not say that people should always maximize their income. Economists recognize that money is traded off for other things and that people value other things. You value your lifestyle more than you value paying off your mortgage faster, therefore you are acting rationally and following the best path for you. At times I value ten year old scotch more than I value the $50 a bottle costs me. Almost Any economist would say that I am making a rational choice when I buy my favorite booze.

    The best path for an individual is determined by that individual. Therefore it’s unpredictable and ‘rational choice theory’ has limited value. People do not continuously calculate according to explicit rational and economic criteria. They hardly ever have access to ‘perfect information’ anyway’. They operate much more according to an implicit practical logic – a practical sense – and bodily dispositions. They act according to their “feel for the game”. They go with habits. The financial world has become so complex that very people can hope to understand it.

    People are also victims to large events. So even when the do act ‘rational’ the outcomes can be irrational because of uncontemplated events. Have you read Nassim Nicholas Taleb’s work on Black Swan Theory?

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  11. CM

    Rich I can’t argue with the gist of what you say. It pisses me off when greedy people are given a way out of a problem of their own making (although it also pisses me off that we have a system which does everything possible to encourage people to make bad decisions about debt, and then when they get into trouble happens we ignore that fact and change nothing). The problem with this recession is that a considerable number of people have been hurt through no fault of their own. They did everything right and still lost their entire savings or their job (or both). In dire economic times I see the value (to society) of helping them out. If there are no jobs, there’s no point just telling them to get a job. They’re not necessarily lazy and at home watching Oprah, just because it’s possible that they might be. To me, the fact that the unemployment rate drops when the economy picks up is a sign that most people aren’t like that. I don’t believe that lazy unemployed Oprah-watching people are a significant enough group to warrant leaving others to suffer through no fault of their own. (Remember, the list of people that end up paying no federal income tax incldues teachers and firemen). I do think a balance needs to be struck somewhere, of course. We all do really, we just differ on where that balance is. With greater relevanc to the thread topic, politicians do too. That they don’t apply a particular economic theory doesn’t mean they aren’t aware of that theory or the mechanisms behind it. Almost always they’re trying to balance a whole lot of priorities. Very rarely does that mean subscribing and enacting one economic school of thought.

    There are continual complaints here that the economic response from Obama has failed miserably because unemployment is at 9% (and not 8% as promised etc etc). If a more laissez-faire had been taken in response to this economic crisis (nothing propped up, no stimulus) we would all surely agree that unemployment would be significantly higher. Wouldn’t we? I realise the theory is that the economy would rebound quicker (somehow), but what is the social damage in the meantime? Unemployment can have devastating psychological consequences on many people (telling them to act rationally doesn’t really work). Cumulatvely what does that do to a society? It may all sound touchy-feeling (and emotional) but it’s not something that decision-makers can ignore. How many riots have to occur before serious breakdown occurs?Government decisions on these things are not just based on economic theory and for good reason. There are wider factors to consider.

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