HOW A STIMULUS PACKAGE WORKS.
It is a hot day in the small Kansas town of Pumphandle and streets are deserted. Times are tough, everybody is in debt, and living on credit.
A salesman drives into town, stops at the only motel, and lays a $100 bill on the desk to pay for a one night's stay... on the condition that the room is decent. He's handed a key so he can check it out.
As soon as the salesman heads upstairs, the motel owner grabs the hundred bucks and runs next door to pay his debt to the butcher.
The butcher takes the $100 and hustles down the street to pay off what he owes to the pig farmer.
The pig farmer takes the $100 and heads off to settle his bill with the Co-op.
The guy at the Co-op takes the $100 and runs to pay what he owes to the local hooker, who's had to offer her "services" on credit.
The hooker dashes to the motel and pays off her room rentals.
The motel owner puts the $100 back on the counter.
The salesman comes back down and states that the room is unsatisfactory. He takes his $100 bill and leaves.
No one produced anything. No one earned anything... However, the whole town is now out of debt and looks to the future with unbridled optimism.
And that, dear friends, is how a "stimulus package" works.
Here's why this critique ain't a good one:
Let's say there are just two people in a town - say, a motel owner and a hooker. Let's suppose that at one point the motel owner borrowed 100 bucks from the hooker, and that at another point the hooker borrowed 100 bucks from the motel owner. Does either party owe either party? Of course not! They're even!
The example in the email was the exact same, but instead of 2 parties, there were 5. A owes B, B owes C, C owes D, D owes E, and E owes A. In other words, nobody owes anybody. Before the salesman came nobody owed anybody, while the salesman was in town nobody owed anybody, and after he left nobody owed anybody.
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Anyhoo, it seems to me that Sciences are granted by the public a sort of Obedience to Mystery. I, Ben the Non-Mathematician, may not understand the upper levels of crazy Mathland, but I'm willing to submit to it, willing to understand that there *are* mathematicians who have been trained in the technical language of their art and do indeed make substantive progress. There's a conception of initiates and non-initiates, and a tangible (if not fragile) trust by the non-initiates towards those who work in the field.
Economics, it seems, has failed to garner such respect. The main cause, I believe, is because economics deals with something everyone has and considers themselves expert of - money. We use it and we know it and we treat ourselves as semi-initiates, expecting common sense to guide us to truth and treating technical economic language with mistrust and disgust.
In the public eye, the most celebrated economist in the world will never be able to stand up to the Warren Buffet and Bill Gates - "hey, they are the ones who are actually making the economy work." No biologist ever felt threatened by a particularly prolific rabbit - "hey man, you study life, but this rabbit here has reproduced life like a 1000 times"; nor do authors feel threatened by men who lead dramatic lives - "hey man, you write interesting stories, but I met a guy who once had a really interesting life"; but economists, due to nature of our interests (money, utility, labor, etc.) are always assumed to be speaking overly fancy things about that which everyone and anyone already "knows".
1 comment:
While true to a large extent, I think the major critiques of economists are that they either are looking at things within specific confines, rather than reality, or that if they understood things so well they would be businessmen rather than economists. Whether these are fair or not is not the point; it is merely what people think.
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