Monday, 18 November 2013

Economics is Rocket Science (Not)

The truth is....economics is like the game of poker.  If you sit down, review the twenty-odd rules of poker, then cover statistical analysis, and sit through an hour or two of risk actions.....then you can sit and play a good round of poker...maybe winning on occasion.

Walk around American high schools and note that economics, financial planning, and budget analysis....rarely if ever....are taught to sixteen year-old kids.  It's a topic in the university halls, but it's taught by paper-tigers....professors who have spent years and decades teaching....never walking in the real world.

We are where we are....with the Affordable Healthcare Act...mostly because of people with no knowledge of health insurance economics.  These people may claim bits and pieces of comprehension, but overall.....they are way out in the deep end of the pool.  They were mostly guessing, and using the attitude of any college professor who has spent his career in the classroom.  These are the people who never sat in a board room to discuss profits, or the margin of a profit.

I've sat and watched episodes of stupidity for years  and years via the news sector and hostile folks who complain about the cost factor of services.  Why do transmission jobs have to cost $1,500?  Why do we have to pay $18 for a super deluxe extra-large pizza?  Why is gas $3.85 a gallon?  Why have haircuts gone from $5 to $14 over the past twenty years?  Why doesn't social security actually pay all my bills after I quit working at age sixty-five?

We are a naive crowd.  We refuse to sit and read through what already exists, to ask questions, or to accept the realities of economics in the heartland.

If I travel around the US in a car.....late in the afternoon....I'll tune to Dave Ramsey on the local FM station.  For an hour or two....I'm entertained by Dave and his economics lessons.  Some lady will call and admit she charged up $35,000 over two years on several credit cards.  There's nothing to show for it....all wasted on junk, trips to Aruba, or some beauty treatment.  Dave is patient....understanding.....but firm.  Admitting you were stupid is step one, so Dave gets through that and then walks the lady through three or four steps to recover.

I tend to feel sorry for the folks who call into Dave's show.  None would want to stand up in their church and admit they spent a hefty amount of money on a house that is way beyond their means, and fallen into debt.  No one would dare show up at a family reunion to admit they bought a farm and can't make a marginal profit....thus going quickly into bankruptcy.

Dave isn't teaching rocket science.  Most of his advice could be written on twenty 3x5 cards.  Most kids....even at the age of twelve....ought to be getting Dave's lessons and counseled on the simplicity of economics.

The problem is....we act stupid and pretend economics is beyond the comprehension of mortal man.  The forty guys who wrote up the Affordable Healthcare Act?  What they wrote was beyond their comprehension.  The ten thousand idiots who triggered the 2008 "stumble"?  They weren't very bright on economics.  The hundreds of dimwits who dreamed the ethanol episode up, and never grasped the cost implication to corn prices?  Yeah, same thing.

If for one brief summer.....we would just take Jack Junior....the mischievous thirteen year-old.....through a 12-minute seminar per day, he just might be smart enough by age eighteen to see economics as simple financial planning.

We are where we are.....simply because of our attitude.  Economics is dull, boring, and beyond our comprehension.  It is....rocket science.  

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