Divide and Conquer

The other day I saw Joe Biden’s chief economist doing an interview on Fox news.  When asked if people would spend or save the money they get out of the stimulus plan (somehow people have gotten the idea that investment doesn’t help the economy only consumption) he said something to the affect of “we expect people to spend the money on what we call inelastic goods, or in other words things people have to have no matter what.” (paraphrase) Now what he means by this is income inelastic or goods who’s income elasticity is between 0 and 1.  The problem is that being inelastic in this sense means that the response of quantity to changes in income is small.  The goods that we would expect people to buy a lot more of when their income increases are income elastic.  I teach this to college freshmen in principles of microeconomics.

I told you that so I could talk about the fairness doctrine.  I have been thinking a lot lately about how people form opinions about things they know nothing about (for many people I think economics falls into this category).  This is how I see it.  People are predisposed to believe certain people and not other people.  In politics this usually comes down to some party allegiance.  Most people are willing to disagree with their party but only if one of two things happen.

1. They can figure out for themselves that the thing their party is advocating is crazy

2. They notice that a vast majority of “experts” on whatever it is that their party is doing are saying that it is crazy

Now I know quite  bit about economics but I’m hardly an expert on, say global warming.  If I want to make an informed decision about environmental policy I need to be able to get an idea of what the consensus in the scientific community is regarding the effects of pollution on global temperatures.  Now imagine that 90% of scientists believe that these effects are real and severe and 10% do not.  (I have no idea what the actual situation is here both sides seem to have claimed victory in this debate) Now if I am unable to actually analyze the arguments put forward by both sides and expose one as logically flawed, the only way my mind will be persuaded to take the side I am less accustomed to is if I notice that the vast majority of scientists I hear from are on that side.  However, if certain folks in Washington have their way this would be impossible.  If for every scientist out of the 90% that was on TV or the radio warning about the risks of global warming there would have to be another one on right after taken from the 10% claiming it isn’t a problem it would always look like 50/50 to me.  Therefore I would always just keep siding with whomever I happened to like to begin with.  This isn’t a great environment for making informed political decisions.  On the other hand, if I were trying to gradually socialize the country and the only threat to my plan was a large-scale counter movement by people who realized the path they were on, this sort of perpetual division and gridlock would probably be quite welcome.

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