Tuesday, June 08, 2010

The Left Flunks Economics 101

From today's WSJ: "Are You Smarter Than a Fifth Grader? Liberals and Democrats do badly on questions of basic economics."

The questions were:

1) Restrictions on housing development make housing less affordable (unenlightened answer: disagree).

2) Mandatory licensing of professional services increases the prices of those services (unenlightened answer: disagree).

3) Overall, the standard of living is higher today than it was 30 years ago (unenlightened answer: disagree).

4) Rent control leads to housing shortages (unenlightened answer: disagree).

5) A company with the largest market share is a monopoly (unenlightened answer: agree).

6) Third World workers working for American companies overseas are being exploited (unenlightened answer: agree).

7) Free trade leads to unemployment (unenlightened answer: agree).

8) Minimum wage laws raise unemployment (unenlightened answer: disagree).

How did the six ideological groups do overall? From best to worst, average number of incorrect responses (out of 8):

Very conservative: 1.30 out of 8
Libertarian: 1.38
Conservative: 1.67
Moderate: 3.67
Liberal: 4.69
Progressive/very liberal: 5.26

HT: Matt B, The Plaid Pundit

34 Comments:

At 6/08/2010 8:21 AM, Anonymous Cooper said...

I find it sad that those who only listen to mainstream media will probably miss several of these no matter their political point of view. It takes a little actual economic incite to get questions 4678

 
At 6/08/2010 8:43 AM, Anonymous Anonymous said...

Frankly, I am embarrassed that this rises beyond the level of basic common sense...

"How nice for you, Mr. Capitalist!"

Hieronymus

 
At 6/08/2010 8:55 AM, Anonymous Anonymous said...

they should never have asked about the the third world workers and being exploited, because until that point all the questions were cut and dry and value free. the word exploitation and the exact relationship povery stricken employers have with their american employers is too slippery.

I think this allows the left to dismiss the entire survey as neo-liberal bias.

 
At 6/08/2010 9:12 AM, Blogger juandos said...

'Liberals and Democrats do badly on questions of basic economics'...

Hmmm, as Caroline Baum of Bloomberg noted 18 months ago some of these leftards also have problem with basic arithmetic...

Obama’s Job-Creation Program Flunks Basic Math

 
At 6/08/2010 11:50 AM, Blogger Michael said...

The problem with licensing is the manner government conducts the licensing. I could today pass all test required to be a master plumber. The state however, will not permit me to be a master plumber for more than a decade.

I've have to be an apprentice for a number of years, then a journeyman for a number of years, before being permitted to be a master. And the state only allows masters to pull permits.

It's all done to gain favors from unions, not serve the public.

 
At 6/08/2010 12:12 PM, Blogger W.E. Heasley said...

“The Left Flunks Economics 101”.

How can you paint the world in your own self image when economics keeps getting in your way? Empirical evidence interferes with “the way things ought to be”.

The test should be based on verbal virtuosity not sound economic evidence! How in this world can you build a constituency based on unfunded entitlements when economics keeps popping up?

 
At 6/08/2010 12:59 PM, Anonymous Mika said...

Oh, since conservatives are profoundly smarter at economics, that must be why when Bush left office we had a massive governmental surplus, no governmental deficit or national debt, low unemployment, and corporate America - especially the largest banks - were stronger than ever with enormous equity!
. . . Give me a break.

 
At 6/08/2010 1:32 PM, Blogger Jet Beagle said...

Mika,

Most conservatives know that Congress, not the President, controls government spending and thus, the deficit.

Most conservatives also know that the President can do very little to influence unemployment - though vetoing minimum wage increases would have helped.

Most conservatives know that it was not the policies of the Republican Party which caused the housing bubble which burst in 2008 and 2009. Rather, it was the Democratic policies of expansion of Freddie Mac and Fannie Mae guarantees - coupled with the Federal Reserve's wild swings in interest rates - which created the housing bubble.

My guess is that you will disagree with all the points I made, as you are probably not a conservative.

 
At 6/08/2010 2:12 PM, Anonymous Anonymous said...

You (conservative idiots) write the questions and then grade them. small wonder you got your already known results. Fools

 
At 6/08/2010 2:47 PM, Blogger sethstorm said...


6) Third World workers working for American companies overseas are being exploited (correct and factual answer: agree).



8) Minimum wage laws raise unemployment (generally correct answer: disagree).


Fixed these for you. These are ideologically charged questions, not economics.

 
At 6/08/2010 2:57 PM, Anonymous Anonymous said...

Anonymous said...

You (conservative idiots) write the questions and then grade them. small wonder you got your already known results. Fools



Well the proof is all over the place like Venezuela, Greece, Cuba, etc. It's just nice to see that liberals can't even answer simple questions correctly. Are these trick questions?

By the way, your response of personal attacks rather than dealing with the facts is so typical, the next survey should be on whether liberals can debate facts without resorting to personal attacks. Look for it soon.

 
At 6/08/2010 3:03 PM, Blogger Andrew said...

How is #6 a factual question? Seems like an opinion to me.

 
At 6/08/2010 3:03 PM, Blogger Jet Beagle said...

Mika,

One more point you may not understand about conservatives: most of us were extrememly displeased with the out of control spending by the Republican Congress from 2002 to 2006. We were equally displeased with George W. Bush's lack of fiscal leadership during this time. So many of us will likely agree with your criticisms of the republican Party's fiscal decisions fro 2002 to 2006. After that, it's Democrats who deserve criticism.

 
At 6/08/2010 3:08 PM, Anonymous CompEng said...

I agree with sethstorm on this one:
6) Third World workers working for American companies overseas are being exploited (unenlightened answer: agree).

7) Free trade leads to unemployment (unenlightened answer: agree).

The first point is highly debatable, since those involved can have remarkably little freedom to choose other options.

And free trade tends to generate jobs on net, but it can surely create local unemployment. Failing to acknowledge that is wrong.

 
At 6/08/2010 3:33 PM, Blogger Bill said...

The correct answers to these questions are not a matter of opinion but a matter of empirical fact. If you do not know the right answer, you are ignorant of reality. It is as simple as that.

 
At 6/08/2010 4:12 PM, Anonymous geoih said...

Quote from CompEng: "The first point is highly debatable, since those involved can have remarkably little freedom to choose other options.

And free trade tends to generate jobs on net, but it can surely create local unemployment. Failing to acknowledge that is wrong."

So your solution to having "little freedom to choose other options" is to to mandate even fewer options? I'm sure all those third world workers love it when American companies close down their factories.

If free trade creates local unemployment it is because the workers in that locality are less competitive than the workers somewhere else. Restricting trade will not make them more competitive. It will only force everybody else in that locality to subsidize those less competitive workers.

 
At 6/08/2010 4:43 PM, Blogger Jet Beagle said...

CompEng: "And free trade tends to generate jobs on net, but it can surely create local unemployment."

Does free trade create the unemployment? I would think that unemployment is caused by:

1. failure of workers to adapt to changes in environment (the value of their particular skills has been reduced yet they have made no provision for acquiring new skills and refuse to accept the reduced value of the skills they possess);

2. failure of workers to accept available jobs or to relocate to available jobs;

3. government interference in the market for labor - through minimum wage laws and through disincentives to workers' adaptation (unemployment compensation, food stamps).

Absent government interference, my guess is that a worker's period of unemployment would be extremely brief. A hungry man will accept whatever work he can find, and create work when opportunities are not readily available.

 
At 6/08/2010 6:02 PM, Anonymous Craig said...

These are ideologically charged questions, not economics.

We all agree that they are ideologically charged. That does not change the fact that they are economics. There are laws of economics no matter how much some of us believe otherwise.

 
At 6/08/2010 6:22 PM, Anonymous Anonymous said...

Is "Benny" posting under the name "Mika" now?

 
At 6/08/2010 8:00 PM, Blogger sethstorm said...

This comment has been removed by the author.

 
At 6/08/2010 8:04 PM, Blogger sethstorm said...


Does free trade create the unemployment? I would think that unemployment is caused by:

...free trade, courtesy of the ability to move around workers, but workers cannot move as fast or as flexibly as businesses.


It will only force everybody else in that locality to subsidize those less competitive workers.

You're too quick to blame the worker and not the business. Better to live with the subsidy, and figure out how to make it work well.




Absent government interference, my guess is that a worker's period of unemployment would be extremely brief. A hungry man will accept whatever work he can find, and create work when opportunities are not readily available.

When business realizes that, they're going to be as screwy as they can be. Just like they are in the Third World (a la Foxconn). Eventually, government intervention arrives to fix that problem.

The reality is that government intervention is present. The relevant programs would do better to make it harder to say no to the unemployed looking for work.

 
At 6/08/2010 11:11 PM, Anonymous CompEng said...

"Gioh"
So your solution to having "little freedom to choose other options" is to to mandate even fewer options? I'm sure all those third world workers love it when American companies close down their factories.
There's a remarkable difference between saying the existence of American factories overseas is necessarily exploitive and that American companies exploit others overseas. The first is definitely not true. I would argue the second is true. There's also a difference between calling a spade a spade and trying to regulate the hell out of everybody.


Jet Beagle,
1,2, and 3 are true as long as you recognize that those are not always solvable problems for workers (although far more solvable than most liberals would admit). As such, the implicit value system is that an individual who cannot carry his weight in society has no right to exist. There have certainly been societies that have adhered to those principles, although I am not aware of any that have survived to date. Perhaps they were not competitive?


"Absent government interference, my guess is that a worker's period of unemployment would be extremely brief."
Are you talking about a world without government? Can you imagine one? Before civilization, such things existed. Or perhaps some time like the early great depression where effective unemployment before the New Deal was in fact still high and unemployment not always brief? Are you talking about 3rd world countries where periods of unemployment are blessedly cut short by simple starvation? I'm just trying to get a gauge here on your paradigm.

 
At 6/09/2010 4:17 AM, Anonymous Anonymous said...

I tend to agree with CompEng's arguments about the lack of validity of the test questions. Even the first question: "Restrictions on housing development make housing less affordable (unenlightened answer: disagree)." is incorrect.

Housing development is always restricted, in the sense that every successful society uses courts (or equivalents) to enforce transactions and prevent outright fraud. There is no reliable empirical evidence that suggests that housing affordability increases when these conditions don't exist. And it isn't "conservative" to believe that we should get rid of basic enforcement of contracts, which are restrictions on housing development.

The wording of the questions may simply illicit a partisan response and not indicate actual economic knowledge. The study, as described in the WSJ, does not control for that.

 
At 6/09/2010 6:24 AM, Anonymous geoih said...

Quote from CompEng: "Are you talking about a world without government?"

Ah yes, the predictable false dichotomy argument.

Are you talking about a world where everything is controlled and decided by government? I'm just trying to get a gauge here on your paradigm.

Are you so afraid of people having the liberty to make their own decisions (and taking responsibility for the consequences) that you're willing to rob, imprison and murder them to keep them from exercising it?

Everything the government does is predicated by the threat 'or we'll kill you'. Pay higher wages 'or we'll kill you'. Charge lower rent 'or we'll kill you'. Only trade with these people and not with those people 'or we'll kill you'.

Anybody so enamored with government to think that it can solve so many problems is really just enamored with using whatever coercive force they wish to make other people do what they want. How very progressive.

 
At 6/09/2010 8:09 AM, Anonymous Hydra said...

Michael said...
The problem with licensing is the manner government conducts the licensing.


Michael is correct. It is one thing to require licenses for the sake of safety, but that process has long since been co-opted.

However it has been co-opted both by the unions and by business interests becasue it creates a barrier to entry.

 
At 6/09/2010 9:26 AM, Anonymous CompEng said...

geoih,

Ah yes, the predictable false dichotomy argument.
Yes, you are setting up a false dichotomy.

Are you talking about a world where everything is controlled and decided by government? I'm just trying to get a gauge here on your paradigm.
Nope. Most people agree that you should be able to do whatever you want to as long as it doesn't hurt someone else directly, and within that, pursue your own desires and exercise your own morals. In my mind, the essential function of government is to arbitrate the details of the process of keeping people from killing each other and stealing from them. That does require force.
I agree that much of government is driven by the short-sighted desire to have more "somehow", by legislating it into being, or by specifically trying to force others to serve you. I obviously oppose that use of government. But don't lose sight of the bigger picture: without a governing body, the individual incentives to cheat, to kill, and to abuse others can be quite high.

 
At 6/10/2010 7:15 AM, Anonymous geoih said...

Quote from CompEng: "But don't lose sight of the bigger picture: without a governing body, the individual incentives to cheat, to kill, and to abuse others can be quite high."

Then who will protect us from the same cheating, killing and abusing people that run this all powerful governing body? I think you're missing the biggest picture by convincing yourself that somehow the people in the government are not as flawed as all the rest of us.

 
At 6/10/2010 9:02 AM, Anonymous CompEng said...

geioh:

"I think you're missing the biggest picture by convincing yourself that somehow the people in the government are not as flawed as all the rest of us."

They are, but in general they are no more flawed than the rest of us. If you want to increase reliability of a system designed to discourage a particular set of behaviors you need:
1. To clearly identify those behaviors to discourage (law)
2. To provide enforcement. Somebody must have a means and inventive to prevent the bad behaviors, or at least to punish them.
3. To provide sufficient redundancy to mitigate corruption and incompetence. This is done through transparency (recording of proceedings), and oversight (a large number of people can blow the whistle on a bad actor. Bad actors must be careful to protect their reputations).

It's like designing a bridge or building a computer: you have to trust a set of people, but a good system can greatly reduce the number of problems you'll see over trusting individuals.

If competition is a proven way to find the best individuals in a system, redundant oversight is a proven way to mitigate the effects of the worst.

Is this infallible? No. But it does mean that instead of a situation where one individual can make things bad for everyone (a weakest link scenario), you have a situation where multiple points of failure are required. This cuts down on corruption and mistakes dramatically.

 
At 6/11/2010 7:12 AM, Anonymous geoih said...

Quote from CompEng: "They are, but in general they are no more flawed than the rest of us."

So, you concede the point that the people in government are just as flawed as anybody else, yet you're still willing to give over to them complete and total control of every aspect of your live.

This is absolutely nothing like designing a bridge. There are absolute physical laws and inherent properties of materials that govern whether a bridge is well designed or not. The interactions of people within a society are not governed by physical laws when one entity is given absolute power over another entity.

Any system of checks or controls will eventually be overridden by the entity that controls the monopoly on the use of force. We are living in an example of that situation today.

Take the example of freedom of speech. The Constitution says "Congress shall make no law ..." yet there are all sorts of laws restricting speech. Restrictions on "commercial" speech, "political" speech, "hate" speech, "obscene" speech, and on and on. Where are these wonderful checks and controls that were so simply demarked with the words "make no law"?

All you're doing is building your own cage and hoping to pick your jailer.

 
At 6/11/2010 9:05 AM, Anonymous CompEng said...

geioh:

"yet you're still willing to give over to them complete and total control of every aspect of your live. "
No, just the aspects that directly affect others. The nice thing about living in a democracy is when government tries to take too much, there are non-violent means to push back. Many of the tea-party folks seem like crackpots to me, but I value the service they are performing in keeping government in check.

"This is absolutely nothing like designing a bridge."
I'm talking about the risk management aspect. There is an analogy to be made between physical and political forces in that both share some predictability.

"Any system of checks or controls will eventually be overridden by the entity that controls the monopoly on the use of force. We are living in an example of that situation today. "
Who offers the greatest influence on government today? Lobbyists from a myriad of organizations which carry no guns. It is the nature of the world that a struggle for power exists. Be grateful the process remains non-violent and that you yourself have influence in that system. Tear down government and you won't.

"Where are these wonderful checks and controls that were so simply demarked with the words "make no law"?"
Thank you for making the observation that it is the nature of people, and not the nature of political systems, that control the world in which we live. People ignore laws they don't support. Government should take note of this as well.

"All you're doing is building your own cage and hoping to pick your jailer."
If you know of a tool against violence that is not a double-edged weapon, I would be glad to hear of it. The point is the dispersal of power among more people, not fewer, and creating an expectation among those people about power should and should not be used. Remove government as it exists and you would soon find fewer people with greater power of your life, because nature abhors a vacuum. This is not immediately intuitive, but give it some thought.

 
At 6/11/2010 11:44 AM, Anonymous geoih said...

Quote from CompEng: "No, just the aspects that directly affect others."

As defined by whom? The bad thing about democracy is it gives legitimacy to the majority, to the mob, to do whatever they see fit, without sanction. When you can justify the morality of a crime committed by a group versus the same crime committed by an individual, you let me know. Life liberty and property are rights of individuals and not subject to cancellation because some concocted majority has decided such.


Quote from CompEng: "There is an analogy to be made between physical and political forces in that both share some predictability."

So now you're saying you can predict and manipulate the future actions of people? People are not inantimate molecules. The only thing predictable is that they will act unpredictably.

Quote from CompEng: "Who offers the greatest influence on government today? Lobbyists from a myriad of organizations which carry no guns."

Again, you've missed the biggest picture. The lobbyists do not have the greatest influence. The politicians and the bureaucrats do. If the politicians and bureaucrats did not have the monopoly power of government, there would be nothing for the lobbyists to buy.

Quote from CompEng: "Thank you for making the observation that it is the nature of people, and not the nature of political systems, that control the world in which we live."

These collectives are fictions in your mind. You speak of "political systems" as if they are entities unto themselves. There are only individuals acting in their own self interest. The forest is not another tree.

Quote from CompEng: "The point is the dispersal of power among more people, not fewer, and creating an expectation among those people about power should and should not be used."

The state is the ultimate concentration of power and violence into the fewest hands. The state is violence monopolized and only opposable by another state. Your goal of dispersing power among the people is completely at odds to your support of power for the state. Your position is not intuitive because it advocates opposite things.

 
At 6/11/2010 4:50 PM, Anonymous CompEng said...

geoih:

"As defined by whom? ... Life liberty and property are rights of individuals and not subject to cancellation because some concocted majority has decided such."
You've got it backwards. Rights and property have no meaning in the context of a single individual. They are solely defined by a contract contract among two or more individuals. Government is guarantor of that contract. Without some sort of shared agreement among the people you live with, you can by definition have no rights. The fact that the majority of people do prefer the existence of such rights is what makes civilization possible. If you fear the tyranny of the majority, well the majority can make mistakes and even commit acts a sensible person would be disgusted at. Yet you can choose to trust the majority, choose a different tyrant, or despotism. Those paths are all well-trodden in history. I'm not aware of any other options that would stand competition by other nearby states.


"The only thing predictable is that they will act unpredictably."
No, sane people respond to their own preferences and external incentives. If there are behaviors you want to avoid, you can change the incentives. Much of Mark Perry's blog is dedicated to that concept.

"If the politicians and bureaucrats did not have the monopoly power of government, there would be nothing for the lobbyists to buy. "
Find a recorded example of an elected official using their power to do nasty things to people without at least the implied consent of the silence of majority... and who keeps their job.


"These collectives are fictions in your mind. You speak of "political systems" as if they are entities unto themselves. There are only individuals acting in their own self interest."
Really, do you also not believe in corporations?

"The state is the ultimate concentration of power and violence into the fewest hands"
Hands importantly tied by the political process. If no one follows, you have no power.

"Your goal of dispersing power among the people is completely at odds to your support of power for the state. Your position is not intuitive because it advocates opposite things."
Consider the negative space. What are the other options? Be responsible for your own security and violently tear down any organization that acquires significant power? Failed African states and the wild west come to mind as potential results.
As Milton Friedman stated in his Free to Choose Series, freedom is not the natural state of affairs, but a condition difficult to bring about, and one which must be guarded. You can't do that alone.

 
At 6/11/2010 9:31 PM, Anonymous geoih said...

Quote from CompEng: "You've got it backwards. Rights and property have no meaning in the context of a single individual. They are solely defined by a contract contract among two or more individuals."

So, I don't have my live, liberty and property unless there is somebody else to take it from me. You're simply not making sense. Will we next be discussing the noises made by falling trees in the unoccupied woods?

Quote from CompEng: "No, sane people respond to their own preferences and external incentives. If there are behaviors you want to avoid, you can change the incentives."

Then tell me what my preferences are and how I will respond to incentives. What are the behaviors I should be avoiding? I think what you really mean is that you want me to act a certain way no matter what my preferences are, and that you'll use coercion and force (i.e., the state) to make me act that way.

Quote from CompEng: "Find a recorded example of an elected official using their power to do nasty things to people without at least the implied consent of the silence of majority... and who keeps their job"

Is this the standard for government that you're setting? All the nasty things that will not be overtly opposed by the majority? This is nothing more than might makes right. The truly nasty things of history have all been perpetrated through the use of state power. Just because a majority of a population didn't stand up against it, doesn't make it right.

Quote from CompEng: "Really, do you also not believe in corporations?"

A corporation is still only a group of individuals acting in their own self interest. The main difference from the state though is that you can voluntarily leave a corporation whenever you wish, and corporations do not hold a monopoly on the use of force against every person within a certain geographical area.

Quote from CompEng: "Hands importantly tied by the political process. If no one follows, you have no power."

Hands tied only if a majority overtly opposes them, as you said yourself.

Quote from CompEng: "What are the other options? Be responsible for your own security and violently tear down any organization that acquires significant power?"

And we return once again to the false dichotomy, now supported by pure pragmatism. Invoking Friedman will not make it ethical.

Explain how giving monopoly power over all things to people who by your own words are just as flawed as everybody else, and based on our political selection process are probably more flawed than the average person, provides for my security and protects me from violence. I'll invoke my own historic figure: Those who would give up essential liberty to purchase a little temporary safety deserve neither liberty nor safety.

It's been great debating with you, but I'm afraid debate isn't my strong suit. I don't generally have the patience, and you strike me as somebody who is a collectivist at heart. Consequently, there is little likelihood either of us will convince the other. Perhaps we'll meet again (hopefully not on opposite sides of the barricades).

 
At 6/12/2010 11:49 AM, Anonymous CompEng said...

geioh:

"So, I don't have my live, liberty and property unless there is somebody else to take it from me."
Life and liberty you were given, but rights, no. Property, debatable. The essential point in my mind is that you live in a world filled with other people with competing interests that have no obligation to you except those they agree upon. You have no basis for complaint about anything anyone does to anyone unless you're willing to come to some agreement. This limits your theoretical freedom, but increases your actual freedom in practice because you don't have to spend all your time and energy guarding against what someone else might or might not do. The ability to trust others to behave is freeing.

It's not a perfect solution, but nothing is free. You say I've set up a false dichotomy, but you have no good alternative, nor have I ever seen one.


"The main difference from the state though is that you can voluntarily leave a corporation whenever you wish, and corporations do not hold a monopoly on the use of force against every person within a certain geographical area."
This is the one argument for libertarianism that really strikes home for me, the strongest argument against all but the most minimal government.


"It's been great debating with you..."
And you as well. I'm always curious to hear how a true libertarian thinks. The ideas seem attractive, but ultimately unworkable in the real world. And I try to accept nothing as true that doesn't work. But who knows, maybe there's something I'm missing? I wouldn't say you're not good at debate, despite my not finding common ground with you. Until we meet again. :)

 

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