The Political Costs of Economic Illiteracy

I had a very disturbing conversation last night with a friend and squash partner.


J is a lifelong Democrat and resident of the Garden State, as well as a practicing attorney. I, on the other hand, consider myself to still be moving through a period of living in New Jersey, and, because independents can't vote in primaries, am a registered Republican. Not so much because I trust them, but because I know I can't and don't trust the Democrats- especially in this state.


I began by gently needling J about Wonderboy's cabinet nominees' tax cheats, and the various waivers on lobbyists that our First Rookie wants in his administration. Then I moved on to the bloated, ill-considered 'stimulus' bill.


J retorted with his usual lead, that of hating former President Bush and anything he did. J excoriated the greed of financial institution CEOs, which, he is convinced, is the only reason we have any economic problems whatsoever. From there, he moved on to claiming that the Bush era saw a lack of regulation, which happens to be factualy so far from the truth as to not even be funny.


Then J claimed that Wonderboy's stimulus of nearly $1T was payback for Bush overspending on Iraq. Hey, J's liberal, so he has to get a whack in on Iraq. And that 'some economists even say we should spend more.'


Oh boy.


I like J. He's a nice guy, very ethical and principled. But he is economically misinformed. In effect, economically illiterate.

He refuses to acknowledge research in the past decade that conclusively proves FDR's own New Deal failed to revive the American economy. He also probably doesn't know, and wouldn't believe, that Chris Dodd and Kent Conrad took bribes from lenders like Countrywide to let them securitize low-doc and no-doc, low-downpayment mortgages via Fannie Mae and Freddie Mac.

What's sad is that his final comment was something to the effect that,

'We both have our scripts. And we believe them. So there's no point talking about these topics.'

Were that it was so simple.

Instead, it's more like this. I understand economics, have read and observed economics for several decades, and note that socializing economies does not bring about long term productive growth and wealth creation. J just believes what the latest Democratic candidates tell him is true.

Even when it's not.

For example, Wonderboy evidently had a lot of fun declaring FDR's New Deal successful, saying something like,

'I thought we all knew what the New Deal accomplished.'

Then he wrongly referred to Republicans objections to his wasteful spending by saying that

'Tax cuts for the rich have been tried and failed. The Republicans are advocating failed solutions.'

That's just false. Even JFK's economic advisor, Walter Heller, cut marginal rates to stimulate economic growth in the early 1960s.

While we're at it, let's understand that there's a lot to the Ayn Rand view that the productive, creative entrepreneurs in American become wealthy because they succeed economically. And by succeeding, create jobs, tax revenues, etc.

Which do you think will create more value in the American economy: cutting taxes for a successful entrepreneur with capital and income, or; sending checks to jobless poor who can only spend the money, rather than invest it to create more value?

Unfortunately, J won't think about any of these ideas. I guess he just listens to Democrats and figures they'd never lie. And they know all the economic facts, too. Which they would accept, even if the facts did not support the large spending programs they intend to create and propagate for decades to come.