Economic Witch Doctors: The New Oncologists

We heard an interesting radio discussion recently. Several economists pondered the question, "If the economy's perking right along, why are Bush's poll numbers on it so low?" The inanity of the question confirmed a belief we've long held. Economists understand the economy in the same way witch doctors understand oncology.

Economists have such a compulsion to count things they make people with obsessive-compulsive disorder look merely "quirky". From Arthur Laffer of curve fame to John Nash's beautiful mind for game theory, economic theorists try to numerically calculate what people will do with their money. Nearly all the theories don't count the most important measure - sometimes people do what they do just because. There's no mathematical logic or natural law that says people always stay within certain emotional tolerances. Much of what they do is simple knee-jerking to something they perceive, but not easily quantifiable.

For example, during the reign of Greenspan the Great, markets fluctuated wildly on the thinnest of economic news. How many times did we hear analysts say things like, "Alan Greenspan announced his plans to cut his toenails next quarter? Markets are up 60% on the strength of nail clipper sales in this quarter." No logic we can see there - mathematical or otherwise.

The BaBushka gets low economic poll numbers for many reasons other than no one trusts him farther than he can throw a corpulent Karl Rove. Aside from the wealthiest one percent, things aren't perking right along. Most Americans face working more hours for less pay. Economists call this productivity. By its nature, productivity is an anti-labor metric. It means that companies squeezing a little more blood from the human turnip by getting more work while paying less for it.

Economists understand the economy in the same way witch doctors understand oncology.

Companies raise productivity in several ways. Most of them look good to the one percenters because their stock value goes up, but not so hot for the 99 percenters where stock options and portfolios are rare.

Layoffs and offshoring are primary tools in the productivity toolkit, but they also instill a sense of instability for the 99 percenters. Those methods also bring a bad side effect that hits the 99 percenters now, but will eventually catch up with the one percenters. Simply, the economy is booming in Bangalore, but in Detroit? - not so much. Who will have the money to buy goods - foreign or domestic - if most of the population isn't working? An economy based primarily on stock brokerages and biz jet industries may not be the best of ideas.

People are also jittery because they can do something that's apparently beyond the math skills of our C-Student-in-Chief - balance a checkbook. Ordinary people understand that cutting income (by way of tax cuts) and spending like a drunken sailor won't balance the checkbook. They see George the Privileged thinks money sprouts from the magic beans you got from Mom and Dad. The only thing worse than a tax-and-spend liberal is a don't-tax-and-spend conservative.

So listen up economists. This Omnipotent Algebra 1 dropout will explain it for you. People in fear of losing their jobs - while CEOs and government have absolutely no understanding of the value of money - don't get all quivery about a perking economy. They don't see how a 2-cent raise in the one percenters' stock portfolio is so hot for them when the 2-cents came out of their ass and not the one percenters' posterior padding.

Now that we think of it, we're wrong about math not being able to predict economic behavior. Here's a little equation to prove it.


So here's the simple explanation for the economists' puzzlement - if only 1% of the polling public benefits from economic policies and 99% don't, polls will indicate exactly what they do - lots of people are sitting in the handbasket waiting for the next trip over the hill and through the woods to Satan's house.

And to add insult to injury, they'll probably need to buy the hand baskets from China.

Truth Told by Omnipotent Poobah, Sunday, April 23, 2006