Pay no Attention to the Man Behind the Podium

“If people don’t have jobs they won’t borrow.  That’s preventing the lending we need to get this economy going again.”

This is a paraphrase of something I heard somebody say on the news yesterday.  I regret that I cannot tell you who it was, I was doing something else at the time and just looked up to see a brief clip of the statement being made to a crowd of reporters.   I think he was a senator or a congressman or something like that.  Now as a student of economics let me tell you that everything about that statement is completely crazy.  For one thing, when someone doesn’t have a job is exactly when we would expect them to borrow (assuming they have the ability).  More importantly, the idea that if we could just get everyone to borrow more money everything would be fine is not based on any coherent economic theory that I’ve ever heard.  

 The most valuable lesson I learned selling clothes for a living  is that you don’t have to know anything about clothes.  You just have to act like you know.  People come to you and ask you questions assuming you know because it’s your job.  You just have to not screw it up by showing any hint of uncertainty.

Also, in a bit of serendipity, I saw on TV the other night that family guy where Lois runs for mayor.  Later in the episode when she wants to raise taxes and everyone gets mad she  just starts talking about terrorists and Darth Vader and everyone gets scared and they say “how much money until I can feel safe again?”  This is exactly what politicians are doing now with the economy.  Any time someone questions what they’re doing they say “if we don’t do this right away the economy is going to collapse!”  And we believe them for some reason.  After all, they are standing behind a podium speaking confidently as if they had a clue what they were talking about.  They want us to think economics is some kind of magic that only they have the power to wield and we have to trust them.   Economics isn’t magic.  You shouldn’t trust them