Let the Facts Speak for Themselves
All presumptions about economic causality are false, or at best only randomly true, because causality in the real world is extremely complex. Even the basic laws of supply and demand -- universally accepted as true by all economists -- are subject to caveats and conditions. Circumstances -- that is to say, empirical facts -- can have a powerful impact on how this law of human behavior expresses itself in different situations. In economics, few events have a single cause, and few decisions produce only one result. No economic ideology even comes close to fully comprehending the complexity of our economy, or our society. It is for this reason that our primary economic ideologies have all become useless.
Hooray! It’s about time we chucked them into the garbage heap of history. The future belongs to those who can comprehend the complex web of interconnections in our global economy and the complicated moral choices in our political life. And to those who, having faith in the future, can proceed by trial and error to improve the world one step at a time, knowing full well that for every two steps forward there will be at least one step backward. Our fondest hope is simply that, over time, the ratio of steps forward to steps backward will be greater than one, so that at some point in the future we will get where we’re going.
Obama is one of us, and so is his economics team. They will proceed by trial and error, freed from the blindness generated by non-empirical ideolgies, and through a series of successes -- and in spite of many mistakes -- his economic team will help us find a way out of this wilderness. That's why we elected him and not the other guy.
So far, he seems able to deliver.
The Old Way – Bad
In the debate over Obama’s stimulus package, self-proclaimed liberals argued that only government spending could effectively jump-start the economy. Self-proclaimed conservatives argued that big government could never work; only tax cuts could stimulate economic growth. Nobody actually bothered to bring any facts to bear – you were supposed to buy into one side or the other based on some kind of faith. Economic “facts” are simply too complex, and for every factual example proving A there is another factual example proving B, the opposite of A, and dozens of factual examples proving nothing at all.
So with the old ideologically-based debating style, facts get pushed aside relentlessly. Arguments are fought out entirely on the basis of pre-existing prejudices:
“Government spending trumps tax cuts! There’s a higher multiplier effect! Government spending creates more jobs!”
“No, you liberal wind-bag, tax cuts rule! The government is good for nothing! Tax cuts 24/7! Starve the beast! “
And so on. What’s missing from this "debate"?
Nothing is ever accomplished through this method of argument because neither side can bring to bear a persuasive set of facts. The true believers continue to believe in their arguments, of course, but the rest of us – call us moderates, swing voters, or skeptical empiricists – refuse to buy in. In the end NO conclusions are possible. No controlled experiments have ever been done on the economy. Even the simplest interventions in the economy have multiple, unexpected, unintended consequences. Apologies to the economics department at every major university, but no firm conclusions about macroeconomic cause and effect are possible. The data set is just too complex. That’s why there are plenty of economists on all sides of every issue.
The old rhetoric said "Believe whatever you want to believe, and excoriate those who believe differently... To hell with facts, let’s argue. And by argue, I mean let’s spew out pre-cooked ideological talking points that sound good and make us feel better about ourselves. But let’s not actually analyze anything, or look at any facts. We can’t be bothered. Facts are boring."
That’s why the debate on Obama’s stimulus plan and his budget comes down to name-calling and not much else: “Liberal” “Neanderthal!” “Socialist!” “Ditto-head.” All these arguments need to be thrown aside – onto the biggest pile of trash in American history.
This style of “argument” has built huge radio careers for Rush, Sean, Bill, and Glen, but it has done nothing for our country. We keep hearing the same old fact-free arguments that go nowhere.
To those of us who revere facts and respect empirical reasoning, this whole debate is ludicrous.
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