Saturday, September 05, 2009

Idiots at the Cato Institute?

The Cato Institute is a think-tank devoted to free-market, Libertarian ideals. It is no surprise, therefore, that they would adopt the following attitude. It always surprises me when smart people make dumb statements however, even though everyone is equally capable in that regard. Economist Chris Edwards was quoted on national television as saying, “The economy would have started recovering by now without government intervention.”

This is a stupid statement because it is demonstrably meaningless, having only emotional appeal to those who dispute the wisdom of current government policy. Don’t get me wrong. I am no fan of bank bail-outs that do not “trickle down” into real relief for those being foreclosed upon. I’m just equally annoyed at pundit inaccuracies.

The first problem with this statement can be compared to the insolvable question, “Do you get wetter running through the rain or walking?” There are too many variables to arrive at an answer. What “Economy” is Edwards talking about? The US economy? The global economy? The macro economy? The micro economy? Too many inter-connected variables. Once a change has been introduced, the chain of cause and effect without that change can only be imagined, not accurately predicted. It’s worse than trying to predict the weather patterns two months later if hurricane Bob had never existed. We do not have a parallel universe to observe and accurately chart the chain of consequences.

Problem two: the “X-factors”. Without an economic stimulus package, do things get so bad that one wild-card individual finds a stash of phosphate fertilizer and blows up the Commodities Exchange? Extreme example, to be sure, but all unpredictable consequences have to be ignored (low probabilities are discounted) when making “what-if” predictions. This idealizes the result, as at least some low-probability consequences are bound to happen, but which ones?

The third problem is slightly different, but in the same vein. Granting for the sake of argument that the statement, “The economy would have started recovering by now without government intervention” is true, it leaves the following question unanswered. From what depth of misery would we be recovering? How deep a trough would the crash-landing of the economy have dug? See the problems above for why this question is equally unpredictable.

Spending time thinking about what would have happened, or what might have happened in these circumstances is living in the past and a waste of time, except from the standpoint of propaganda, or agit-prop. One is far more productive when attempting to chart a course based on what did happen, or what Lewis Black among others likes to refer to as, “FUCKING REALITY!” Chris Edwards of the Cato institute is either an idiot for making such statements, or he thinks his audience is stupid enough to accept these statements at face value, or both.

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At 5:37 AM, Blogger Unknown said...

I am baffled by your critique. It is fair to say what the CATO author said. After all where was your analysis when Obama and Bush felt the economy would be worse without a bailout? Were they idiots because they didn't consider the x factors. Were they dwelling in the past when they looked at the crisis based on economic data from the months prior. Your criticisms are not that hard to deal with. Not hard enough to reject opinion.

At 1:24 PM, Blogger breakerslion said...

Yes, you are baffled by my critique.

"Fair" perhaps, but misleading out of the context of supporting data and projections. It leaves the average news consumer with the impression that we would be in the exact same place that we are now vis recovery. That's not what he said, but that's what he implied. That was the problem I had with it.

Nobody asked me for my analysis, but that is not relevant. Mr. Edwards has a predisposition to non-interference when it comes to capitalism, and will probably weigh the evidence accordingly before rendering an expert opinion.

At 3:38 PM, Blogger breakerslion said...

But wait! There's more!

Obama and Bush didn't "feel" the economy would be worse, etc., they believed it. They believed what their advisors were telling them, though that analysis is as questionable as is Edwards'. Oddly, I thought I heard Edwards use the word "feel" in his statement about the economy, but I was unable to find that clip to confirm, or I was mistaken. "Feel" is a word that is often attributed to make it look like the opposition has pulled policy out of their lower intestine. When someone of alleged genius-level thinking uses it, I think that person is either being lazy, disingenuous, or manipulative in their choice of language.

All of the economic conclusions drawn should be challenged on the basis of political and special-interest bias. As we so often point out to the religious community, starting with a pet conclusion and cherry-picking the data to support that conclusion is not the Scientific Method.

Lastly, The advice given Obama and Bush was based on actual historical events. Edwards' statement was based on what would have happened in the absence of an historical event. Do you still fail to see the significance of that difference?

At 7:35 AM, Anonymous rita said...

Spouting off statements appealing to the emotions & political ideologies of a selective audience is too often accepted as as wisdom, truth, logic, & as you point out reality. I am amazed at how stubbornly people will defend illogical & unrealistic ideas. It's a dangerous flaw in our reasoning, perpetrated by those who benefit from ignorance, such as advertising agencies, & political & religious leaders.

Chris Edwards of the Cato institute is either an idiot for making such statements, or he thinks his audience is stupid enough to accept these statements at face value, or both.
The economy is a very complex issue so, I would think probably...intellectual laziness on the part of the speaker & his counting on ignorance on the part of the audience. (The same thing you said, only worded a little nicer.)

At 9:32 PM, Blogger Rev. Barky said...

was it Robert Reich that said that the "bailouts" would make things worse? What's going on anyway? Where are we really? What color underwear does Dick Cheney wear?


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