Economic Mumbo Jumbo Scott Adams Dilbert Blog

Economic Mumbo Jumbo

via Dilbert.com Blog on 1/3/12

Sometimes it is better to sound smart than to be smart. Today I will discuss economic policy in an oversimplified and misleading fashion. I'd be surprised if anything I say makes sense. But it will sound brilliant because I will use some psychological tricks to accomplish the illusion.

First, I'll tell you what you want to believe. That gives me automatic credibility. After all, who do you trust more than yourself? If I agree with you, obviously I would be an awesome president.  So look for me to say things you already agree with. As soon as you feel that my opinions and yours are similar, as if we are one mind in two bodies, I'll nudge you someplace new, and it will feel as if you got there on your own. (Hypnotists call this process pacing and leading.)

Secondly, I'll oversimplify a complicated topic. Oversimplifications are compelling because we humans prefer the illusion that we understand our environment over the reality that we don't. The illusion of understanding gives us a feeling of control over our lives. We feel as if we can fix the problems of the world through our intelligent voting.

Let's agree that everyone prefers smaller government, but not everyone likes the tradeoff to get there. Some people would like the same level of government services we have now, or even more services, but at a lower cost. Unfortunately, no one knows how to get more stuff for less money in the short term. Other people, such as Ron Paul, would shrink the government quickly and accept the substantial risk that comes with that sort of change. All big changes have unintended consequences; it's unavoidable. So, given all of that, what is the sensible middle ground between growing the government forever - which Republicans and Democrats are likely to continue doing - and making drastic and unpredictable changes the way Ron Paul might?

My plan for shrinking government is to freeze total federal spending immediately and forever, and let inflation eliminate the bureaucracy by chewing into its budget over a few generations. That way, the government can unwind at a leisurely pace, allowing technology, competition, and better ideas to deliver natural cost reductions over time. With my plan of gradual government shrinkage, there's no shock to the system, and no outsized risk.

As President, I will still look for ways to eliminate or streamline entire functions of government. But realistically, the bureaucracy has a lot of fight in it, and the easy cuts will be fewer than you'd hope. I'm suggesting more of a rope-a-dope approach, capping the budget and allowing the government to punch itself out over a few decades.

The best part of my plan is that it keeps government spending relatively high today, when we still need the economic stimulation. The only downside, which you correctly point out, is our gigantic national debt. Don't we need to drastically cut spending soon to reign in the debt? Raising taxes - even if you favor that option - won't put much of a dent in the deficit.

Luckily, national debt isn't like personal debt. Personal debt, such as your car loan, needs to be paid back over a certain period, such as three years. As a car buyer, your biggest cost is the car itself, not the interest on the loan. National debt is entirely different. The nation has the option of paying interest only for generations, until normal inflation turns the debt into a trivial amount. For that to happen, all we need is a return to some sort of normal economic growth, which is apparently happening on its own. And the best way to ensure normal economic growth is to keep borrowing and government spending high for the next few years. Obviously we'd need to reassess things as we go.

Keep in mind that the government is a semi-closed system. The United States is borrowing half of its money from its own citizens. When you get a car loan, your interest and principle payments leave your pocket and go to the bank. When the United States borrows from one citizen and uses the money in a way that stimulates the economy for all citizens, much of that money stays within the system.

If I tell you our national debt is somewhere in the range of 100% of our GDP, which is true, it sounds scary. But if you consider that a typical home loan is 300% of the owner's annual salary, it puts things in perspective. And remember that a typical homeowner didn't borrow half of his money from himself, the way the government does. It's also worth mentioning that the national debt was much higher after WWII than it is now, and that was the beginning of unprecedented economic prosperity in the United States. While it's true that some level of debt could crush the United States, history says we're nowhere near that level. If that situation were to change, I'd flip-flop to an economic policy that made sense with the new data.

I will close my argument with a final trick of persuasion: I'll summarize my solution with a familiar truism. The truism is that any good business agreement makes all sides a little bit unhappy while delivering most of what everyone needs. My solution would deliver economic growth and smaller government, but without the deep cuts in spending that Republicans want, and without the guaranteed-forever government benefits that Democrats want, nor the quick and deep cuts that Ron Paul supporters favor. Everyone would likely get what they want in the long run, while no one would be happy in the short run. That's what a good deal looks like.

You might question whether I, as President, would have enough clout to push this or any other economic policy through Congress. It's a fair question. And the answer is yes, I could make it all happen. If an independent such as myself gets elected President, it will make every member of Congress crap his or her pants. It would be the ultimate mandate. And as an independent, with no campaign funding needs, I could shine a bright light on any obstructionist member of Congress and directly ask voters to make a change. I would respect all honest disagreements. But I would be a nightmare to any politician who objects for transparent political motives.

As a one-term president, no one would need to criticize my policies or thwart my plans just to gain an advantage in the next election. In our current polarized political environment, only an independent president has a chance of getting anything done domestically. This is probably the only time in our history that has been the case. In chaos, there is opportunity. And the opportunity in this situation is to elect an independent President.