Checking the wind (and gauging what’s true)


I’ve been taking a break from blogging over the Christmas holiday. Actually, I’m busy preparing my year-end book review post, scurrying to add a few more titles to my list, and also enjoying a bit of downtime with some of my favorite people.

While my intention was to stay off the JBE horn until my annual book wrap, this morning I heard something that I couldn’t resist responding to. In fact, one of my year-end reads, Jared Bernstein’s excellent book on economics called, Crunch: Why Do I Feel So Squeezed (And Other Unsolved Economic Mysteries), had prepped me well for something that Joe Scarborough said this morning on MSNBC, a statement that gets repeated ad nauseum without most Americans batting an eye, regardless who the speaker is that’s saying it. The statement by Mr. Scarborough was, “social security is going bankrupt.”

Now in defense of Scarborough, he was responding to a clip from the campaign where Vice President Biden is speaking about social security, but Scarborough did nothing but compound the misinformation by repeating the same old tired line that gets run out there time and time again.

Bernstein’s book does us all a favor by demystifying and making economics easier to understand than most practicing economists do. I liked his approach of boiling and distilling much of what he covered in his 200+ pages down to three very distinct principles that he details at the front of Crunch. He also simplifies economics with the simple definition for economics,  as “a set of decisions about how to produce resources and opportunities.” This is much different than most of the Econ 101 I had back in the day.

While I’m not here to review Bernstein’s book (although that’s not a bad idea), and I’ll have a bit more on the book by way of summary in a few days, I found this morning’s example to be another validation for taking control of your information flow and empowering yourself to think critically about the propaganda that’s all-too-often being peddled. While I don’t think Scarborough was perpetuating anything other than his own ignorance, it’s important to recognize that you can be your own weatherman when it comes to the weather, by ferreting out accuracy in your information.

So the idea that social security is going bankrupt keeps getting run up the flagpole to nodding heads, with policy discussions centered around this so-called fact—except, according to Bernstein—it’s not a fact. What is factual is that politicians of all stripes have been using this meme dating back 70 years as a means to fog a little fear out into the atmosphere and make some political hay. That’s why Bernstein’s principles that he lays out are so important.

These three principles form the basis of how you should look at what Scarborough (or anyone else, for that matter) says on all manner of issues affecting your economic well-being. Here they are:

1)  Economic outcomes are generally thought to be fair, in the sense that market forces dole out rewards to those who merit them. But that’s not always the case. Power, whether it’s based on political clout, wealth, race, or gender, is also a key determinant of who gets what.

2)  Economic relationships often play out in surprising ways, contradicting both basic logic and textbook theory. The path to economic truth is paved with evidence, not assumptions.

3)   Since economics is concerned with finite resources, economic decisions often involve trade-offs: choosing one outcome over another. Though these tradeoffs are usually thought of as benign outcomes of rational discourse, it’s not (go back to #1).

You mean I can’t have my cake and eat it too? No, you cannot.

What? I can’t pump carbon into the atmosphere and not end up “breaking the weather?” No, you may not.

Ideas do have consequences. Not all information is the same. There are other maxims I could offer, but that’s a little of what I’m getting at here, thanks to reading Bernstein and riffing on Mr. Scarborough’s misstatement this morning.

Another year is about to wind down to completion. Less than a week from breaking out my new calendar, I’ve been looking backwards in order to look ahead. As old-timers used to say, you have to know where you’ve come from to know where you’re going. Yes, a bit clichéd, but certainly grounded in wisdom that echoes down the corridors of time.