Why Most People Misunderstand Economics

Chris DillowI read a very interesting Chris Dillow article, On Misunderstanding Economics. It is based upon research that shows that people are very confused about how economics work. The most obvious example of this is the idea that the macro-economy is like a household. This is where we get this nonsense from Obama in 2009 when we were still deeply in recession saying, “All across America, families are tightening their belts and making hard choices. Now, Washington must show that same sense of responsibility.” It sounds right, but it is totally wrong. It’s fine for me to tighten my belt when I’m trying to pay down my debt, but when everyone does it — when your spending is my income — it doesn’t work.

In addition to this, people make associations. For example: inflation and unemployment are both bad, so people put the two things together and think there is a correlation. That’s not true, of course; it is generally the opposite. Similarly, they associate government spending with unemployment. Again: exactly the opposite of the way things are. People are deeply confused about economics. And what I’ve noticed in my life is that those who think they understand economics the best are usually the most confused. It is a classic example of a little knowledge being a dangerous thing.

But it comes as no surprise to me that all of these misunderstandings lead to conservative policy. I think a large part of this is because conservatives run around saying that these things are correlated. For example, for decades, conservatives have claimed that tax cuts for the rich will cause economic growth because the rich will use the extra money to create jobs. They’ve been so successful at this propaganda that they no longer even have to explain why tax cuts for the rich will lead to more jobs. It is just “common sense” that tax cuts for the rich will create jobs.

The issue with government “belt tightening” is a great example. It isn’t hard to make people understand this. If everyone spends less money, everyone will see the amount of money they earn go done. As a result, everyone will have less money to pay their debts. But the debts themselves will not get smaller. Thus, everyone spending less will actually make the debt problem worse. Indeed, we have seen this in a number of EU countries, where they’ve cut their spending savagely, only to end up owning more money relative to their GDPs. This is not hard to understand.

The problem is that the our media infrastructure is totally vested in believing the “common sense” that “families are tightening their belts and making hard choices” so “Washington must show that same sense of responsibility.” No one goes around saying that billiard balls move according to Newton’s laws of classical mechanics so quarks must too. Everyone understands that reasonable sounding analogies don’t necessarily work. Indeed, I don’t know of any economist who claims that the macro-economy acts the way that a household economy does. But conservatives who have a vested interest in pushing bad economic policy are allowed to do so. And that’s the reason that people misunderstand economics.

Why Asian Americans Don’t Vote Republican

I Am an American - Lange

Cecilia Hyunjung Mo wrote a good article over at The Washington Post, Why Asian Americans Don’t Vote Republican. Her idea is that Asian Americans still feel like foreigners in this country because they are still treated that way, even if they were born in Texas. That’s certainly part of it. And let us not forget that at least in the western United States, Chinese immigrants were the most hated group only a century ago.

But I have a different take on why Asian Americans aren’t keen on the Republican Party. While it is certainly true that Asian Americans are treated as outsiders in their own country, that’s true coming from both political parties. The problem with Asian Americans and the Republican Party is really a broader issue. Republicans have really bad policy ideas. They would not manage to have substantial support throughout the United States if it weren’t for the fact that they push the idea that whites are the “real” Americans and that all those “fake” Americans (Asians, Latinos, blacks) were taking away what was rightly theirs.

The question that the Republicans need to ask of themselves is why it is that all groups who aren’t vested in white resentment avoid them.

This allows the Republican Party to push ideas like tax cuts for the rich and privatizing Social Security. These are not even popular among Republican voters. Yet those voters still side with the Republicans. They vote for the Republicans not because of the explicit policies but because of the implicit message: we are the party that stands with you and against all those invalid Americans who are destroying what is the true nature of America. If you took away this implicit message, very few people would vote for the Republican Party — or at least the Republican Party would have to drastically change the policies that it is pushing.

Many Americans with Asian ancestors may well react against the clear white supremacist nature of the Republican Party. But I don’t think that’s the main thing. There are two things that the Republicans have to offer. First is the pro-white narrative about how they did everything for themselves and didn’t depend upon the abuse of Africans and native peoples and Chinese and Latinos and pretty much every other group you can think of. That clearly isn’t going to appeal to people who don’t see themselves as white. The second thing the Republicans have to offer is policy that further enriches the rich and goes to war whenever possible. That’s a very unpopular set of policies and people only go along with if they are blinded by the first thing the Republicans offer.

The question that the Republicans need to ask of themselves is why it is that all groups who aren’t vested in white resentment avoid them. Perhaps their biggest problem is that over the decades, they’ve created an insular culture that they really think that everyone agrees with them. (“Everyone at my country club is a Republican!”) This leads to their conspiracy theories about how ACORN stole not only the 2008 election, but also the 2012 election, long after the group even existed. Or more generally why there must be wide scale voter fraud because obviously America wanted John McCain and Mitt Romney to be president.

It’s not a secret that the Republican Party is in a bind. If it reaches out to other groups, it is going to lose its base voters. These voters, after all, don’t vote Republican because they really think that the capital gains tax or the estate tax need to be reduced. So how do they signal to Asian Americans that the Republican Party likes them while making white people feel that they are aggrieved by everyone else? I’m not saying they can’t do it. That’s the one thing that Republicans are very good at. But at this point, they don’t even seem to be interested in it.

Morning Music: On Top of Old Smokey

The Weavers - Greatest HitsI’m finally back home, so if you think my work has been slipping recently, I should be back up to my usual quality of work tomorrow. Today, we are going to listen to “On Top of Old Smoky.” This is another of those songs that were so well know that we had parodies of it. In fact, I remember singing “On Top of Spaghetti” in the third grade. According to Pete Seeger, parts of the song date back to the Elizabethan period, but that may be folklore. But there is no doubting that the song is old. Seeger seems to have been the first guy to nail down the version that we now know. Previous versions don’t sound much like it.

The song was made famous in 1951 with a recording by The Weavers. It’s well made. But it doesn’t exactly inspire me.

Anniversary Post: Trace Beaulieu

Trace Beaulieu[Forgive me friends for doing a bit of recycling here. I’m exhausted from this last few weeks of preparing for my niece’s wedding — in addition to all my work for Frankly Curious and my recently aggravating work for Quality Nonsense. (I love the work, but I am fighting with a very annoying contractor at the moment.) And given that today isn’t a terribly good day for historical events, I’m going to do a birthday. -FM]

The great Trace Beaulieu who is 57 years old today. He is best known as the original (and One True) Crow from Mystery Science Theater 3000. He is also, interestingly, the only decent puppeteer the show ever had. No one else ever seemed to have figured out the art. It’s aggravating to watch the others; I take personal exception. Also, after Beaulieu left the show, Crow became a much nastier character (although he was still hilarious).

Every time Beaulieu’s birthday comes up, I think about starting a twitter account: The Gospel According to Crow. It would just to be a single quote from Crow each day. You know, like, “MST3K 3:21 I wanna decide who lives and who dies!” But Andrea seems to think it wouldn’t have enough context for people. Like that line: it was in reference to Joel asking Crow what he wanted for Christmas. So I’m going to think about it for another year. But the Word of Crow must be spread.

In the meantime, here is Beaulieu as Crow doing Jay Leno:

Happy birthday Trace Beaulieu!