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Magic Numbers in Politics

InnleggSkrevet: 15 Okt 2009, 15:43

by Thomas Sowell (October 12, 2009)

Back in the days of the Soviet Union, two Russian economists who had never lived in a country with a free market economy understood something about market economies that many others who have lived in such economies all their lives have never understood. Nikolai Shmelev and Vladimir Popov said:
"Everything is interconnected in the world of prices, so that the smallest change in one element is passed along the chain to millions of others."

What does that mean? It means that a huge increase in the demand for ice cream can mean higher prices for catchers' mitts, among other things.

When more cows are needed to produce more milk to make ice cream, then fewer cows will be slaughtered and that means less cowhide available to make baseball gloves. Supply and demand mean that catchers'
mitts are going to cost more.

While this may be easy enough to understand, its implications are completely lost on many people in politics and in the media. If everything is connected to everything else in a market economy, then it makes no sense to have laws and policies that declare some given goal to be a "good thing," without regard to the repercussions, which spread out in all directions, like waves that spread across a pond when you drop a rock in the water.

Magic Numbers in Politics: Part II

InnleggSkrevet: 15 Okt 2009, 15:44

by Thomas Sowell (October 13, 2009)

It is understandable that many people do not pay nearly as much attention to political issues as they do to practical decisions that they have to make in their own lives. For one thing, they have only one vote among millions, so their influence on what policies the government will follow is in no way comparable to the weight of their decisions in their own personal affairs.

One consequence is that politicians can get away with half-baked arguments that people would never accept in their personal lives, where they apply a lot more scrutiny.

People who would never let some high-pressure salesman rush them into signing a contract to buy a car, before they have a chance to read the contract, may see nothing wrong with a President of the United States trying to rush Congress into passing a thousand-page bill before anybody has a chance to read it all.

Numbers, as well as words, get more scrutiny in private life than in political issues. Politicians love to cite magic numbers that are supposed to tell us whether some policy is a "good thing" or not. By sheer repetition, it is claimed that bigger numbers mean better results, whether the number is the percentage of families that own their own homes or the miles per gallon that automobiles get.

Administrations of both political parties, going back as far as the 1920s, have from time to time pushed the idea that a higher percentage of people owning their own homes is a "good thing," completely ignoring such repercussions as rising foreclosure rates in the wake of extending mortgage loans to people who are unlikely to be able to keep up the payments.