Is Twitter The Ultimate Dumbing Down?

Dumbing down. What is it? Why is it?

A term first recorded in 1933, I've seen it described as taking a complicated argument and "simplifying" it to the point where it can be communicated to the largest number of people possible. The implied meaning is, of course, "revising something so as to appeal to those of little education or intelligence."

Is the social network,Twitter, the ultimate in dumbing down? Take the following, for example:

Form as Tweeted:

@bp no time to write shorter

Form pre-Tweet:

Blaise Pascal (1623-1662, child prodigy, French mathematician, physicist, inventor of the mechanical calculator, writer, philosopher) said in a postscript to one of his letters, "I have made this letter longer than usual because I lack the time to make it shorter."

Or, does Twitter have a long way to go? You tell me.

The Problems with Anger and Public Policy Changes

I have been thinking about "anger" lately. I know from study and personal experience that real anger can be defined as an emotion based upon a person's perception that an expectation hasn't been met. People tend to respond to this perception of "unrequited" expectation with feelings of loss, disappointment, frustration, helplessness and the like.

They also tend to believe they have been wronged and that the wrong is the result of a deliberate, personally directed, and controllable aspect of another person's or group's behavior. In other words, a single, discrete, exogenous cause. They then feel they want to take retaliatory actions against this exogenous cause, the "other" person or group.

Even when there are multiple reasons for the failure to meet expectation, people rarely find and focus on more than a single reason. They find it easier to merge all the reasons into one and put their focus on that one, treating it as if it embodied the rest. It comes down to practical time and attention management as well as intellectual blindness.

No argument can be sustained that feelings of anger improve the quality of the decision-making process. A serious problem with feeling anger is that it causes people to lose their ability to monitor themselves and observe things objectively. To cover the loss, the person falls back on intuition rather than facts.

Objectivity, however, is only the first thing to go. To make it worse, the loss of objectivity is followed quickly by loss of empathy. Prudence is then kicked out the door; hatred of the "other" roars in through it.

The overall significant reduction in a person's ability to process information, to think or reason and exert control over his behavior can have serious negative consequences. People may very well be wrong about the focus of their anger being the cause of the wrong. They may end up misdirecting their anger against the wrong person or group and doing harm to innocents.

Now, all of that was about "real" anger. There is another kind of anger, a much more dangerous kind: feigned anger.


It is not uncommon that people can't tell if the outward expressions of anger they see is genuine or not. This is important to know because psychologists tell us that people have a tendency to follow the dictates of those people they consider to be strong. Further, people also have an unconscious tendency to equate "angry" people and strong people. This happens whether the anger is real or feigned. All that is necessary is the observation of the appearance of anger.

Because of this, feigned anger is a tool useful for manipulation of others. It is used to influence emotions and thereby shape people's behavior. The use of feigned anger has a long history of being successful in changing attitudes and influencing decisions.

People use feigned anger to avoid or get out of discussions. Military Drill Instructors use it in training recruits in Boot Camp. Labor union representatives use it to intimidate management during negotiations. Police use it in interrogations of suspects to break down their resistance. Politicians use it as a distinct strategy to influence the direction of social changes they advocate and rush public policy changes through to passage before people can regain their pre-anger state of objectivity. You can probably come up with a bunch more.

The point is, it's really important to keep in mind that, in the presence of anger, decisions should not be made, and public policy should not be changed. Bad situations do not result in good laws. The long-lasting damage that can be done is real; even when the anger is not.

Conversation with Henry Part 20

With great anticipation of finally getting something nailed down with a specific example of  a commonly accepted fallacy and its effects, I gave my full attention to Henry, who began, “the simplest illustration possible, broken pane of glass.” Seeing he had my attention, he continued, “A young hoodlum, say, heaves a brick through the window of a baker’s shop. The shopkeeper runs out furious, but the boy is gone. A crowd gathers, and begins to stare with quiet satisfaction at the gaping hole in the window and the shattered glass over the bread and pies. After a while the crowd feels the need for philosophic reflection. And several of its members are almost certain to remind each other or the baker that, after all, the misfortune has its bright side. It will make business for some glazier. As they begin to think of this they elaborate upon it. How much does a new plate glass window cost? $500? That will be quite a sum. After all, if windows were never broken, what would happen to the glass business? Then, of course, the thing is endless. The glazier will have $500 more to spend with other merchants, and these in turn will have $500 more to spend with still other merchants, and so ad infinitum. The smashed window will go on providing money and employment in ever widening circles. The logical conclusion from all this would be, if the crowd drew it, that the little hoodlum who threw the brick, far from being a public menace, was a public benefactor.” Henry paused to see if I was still with him.

I was, but I felt compelled to fill in the gap, “I don’t know that I’d go so far as to conclude that the hoodlum was a public benefactor, Henry, but there sure seems to be quite a bit of  logic in the other parts.”

“Take another look,” said Henry. The crowd is at least right in its first conclusion. This little act of vandalism will in the first instance mean more business for some glazier. The glazier will be no more unhappy to learn of the incident than an undertaker to learn of a death. But the shopkeeper will be out $500 that he was planning to spend for a new suit. Because he has had to replace a window, he will have to go without the suit or some equivalent need or luxury. Instead of having a window and $500 he now has merely a window. Or, as he was planning to buy the suit that very afternoon, instead of having both a window and a suit he must be content with the window and no suit. If we think of him as a part of the community, the community has lost a new suit that might otherwise have come into being, and is just that much poorer.”

“But, the glazier has gained some business. Isn’t that a plus?” I asked.

“The glazier’s gain of business, in short, is merely the tailor’s loss of business. No new ‘employment’ has been added. The people in the crowd were thinking only of two parties to the transaction, the baker and the glazier. They had forgotten the potential third party involved, the tailor. They forgot him precisely because he will not now enter the scene. They will see the new window in the next day or two. They will never see the extra suit, precisely because it will never be made. They see only what is immediately visible to the eye. So we have finished with the broken window. An elementary fallacy. Anybody, one would think, would be able to avoid it after a few moments’ thought.”

I replied, “I may be a bit thick in the head here, but how does the broken window fallacy reflect what is going on in the world?”

“The broken window fallacy, under a hundred disguises, is the most persistent in the history of economics. It is more rampant now than at any time in the past. It is solemnly reaffirmed every day by great captains of industry, by chambers of commerce, by labor union leaders, by editorial writers and newspaper columnists and radio commentators, by learned statisticians using the most refined techniques, by professors of economics in our best universities. In their various ways they all dilate upon the advantages of destruction.”

“Oh, Henry,” I said, “Now the whole picture becomes clear. Thank you, thank you, thank you for the conversation and everything. Have a great day. See you later.”

Conversation with Henry Part 19

I thought to myself, “How does the ‘bad’ economist do it?” Turning that into speech, I said to Henry, “Okay, what I hear you saying, basically, Henry, is that ‘bad’ economists must do better ‘powerpoint’ slides than good economists. I don’t know why they can do this. That’s a complete mystery to me. But, there’s an even bigger mystery. What I want to know is: how are these ‘bad’ economist able to be more plausible when what they say is in error?”

Henry responded, “The basic reason for this ought not to be mysterious. The reason is that the demagogues and ‘bad’ economists are presenting half-truths. They are speaking only of the immediate effect of a proposed policy or its effect upon a single group. As far as they go they may often be right. In these cases the answer consists in showing that the proposed policy would also have longer and less desirable effects, or that it could benefit one group only at the expense of all other groups. The answer consists in supplementing and correcting the half-truth with the other half.”

“Oh,” I groaned. “Well, good luck on that. But why is it so hard to do the supplementing and correcting?”

“To consider all the chief effects of a proposed course on everybody often requires a long, complicated, and dull chain of reasoning,” said Henry. “Most of the audience finds this chain of reasoning difficult to follow and soon becomes bored and inattentive.”

I don’t know what happened to me on hearing that. I just couldn’t help myself. I lost it. I burst out into a full guffaw. “Henry,” I screamed at him. “I know, I know. I feel like you have been making me crawl on my hands and knees over a field of broken glass. If it weren’t for the pain, I’d have gone to sleep a long time ago. I don’t know how I’ve gotten this far.” I got my heaving sides under control and said, “Well, I guess it isn’t just the pain, I am beginning to get your points. I’m sorry, Henry, please go on.”

Henry’s face was slightly flushed, but, responding unabashedly, he said, “The bad economists rationalize this intellectual debility and laziness by assuring the audience that it need not even attempt to follow the reasoning or judge it on its merits because it is only “classicism” or “laissez faire” or “capitalist apologetics” or whatever other term of abuse may happen to strike them as effective.”

“Henry,” I said, repressing repeated urges to laugh out loud  again, “I am overwhelmed. That was great material. Obviously, due to my thick headedness, you had to repeat yourself on the central lesson a number of times. By this time, I should have it down cold. But, in the present context, however, I think you need to get more specific. Can you give me one simple example of a commonly accepted fallacy and its effects?”

Henry nodded his head in the affirmative.

Conversation with Henry Part 18

I thought to myself, “Its beginning to seem like all economic problems are caused by professional economists. But, these are the guys who are supposed to be solving economic problems, not making them. Who can you trust, anymore?” “Henry,” I said, “it sure gets discouraging to think that the very people we expect to know what they are talking about, don’t! I hear these fallacies every where I go—every time I turn on the TV news. This is all the ‘talking heads’ are spewing out—a bunch of economic fallacies. What’s the fundamental problem?”

Henry replied, “The most frequent fallacy by far today, the fallacy that emerges again and again in nearly every conversation that touches on economic affairs, the error of a thousand political speeches, the central sophism of the “new” economics, is to concentrate on the short-run effects of policies on special groups and to ignore or belittle the long-run effects on the community as a whole.”

“Well, I know; you’ve made that abundantly clear—a couple of times already, Henry,” I replied. “You’re beginning to sound like a broken record. What I want to understand, but still don’t understand, is why the people you refer to as ‘professional economists’ keep doing this. What’s in it for them?”

Said Henry, “The ‘new’ economists flatter themselves that this is a great, almost a revolutionary advance over the methods of the ‘classical’ or ‘orthodox’ economists, because the former take into consideration short-run effects which the latter often ignored. But in themselves ignoring or slighting the long run effects, they are making the far more serious error.”

“How so,” I asked.

“They overlook the woods in their precise and minute examination of particular trees,” said Henry.

“You mean in their mathematical approach to economics?” I asked. “They seem to have charts and graphs by the hundreds. They show everything sliced and diced from here to Sunday.”

Said Henry, “Their methods and conclusions are often profoundly reactionary. They are sometimes surprised to find themselves in accord with seventeenth-century mercantilism. They fall, in fact, into all the ancient errors ,or would, if they were not so inconsistent, that the classical economists, we had hoped, had once for all got rid of.”

“Henry, this is very frustrating to hear,” I said. “I’m still missing something, though.  If the so-called ‘professional economists’ are in error, and the errors are so obvious, how are they getting away with it?”

“It is often sadly remarked,” said Henry, “that the bad economists present their errors to the public better than the good economists present their truths. It is often complained that demagogues can be more plausible in putting forward economic nonsense from the platform than the honest men who try to show what is wrong with it.”

“Well,” said I, having learned from my own experiences in trying to refute fallacies, “I guess that’s what makes some demagogues so successful.”

Conversation with Henry Part 17

I started thinking to myself. “I hate that thought. It sounds so fatalistic. Almost as if nothing is worth bothering with unless it is in the short run. Stupid!”

Breaking my reverie, Henry continued, “The tragedy is that, on the contrary, we are already suffering the long-run consequences of the policies of the remote or recent past. Today is already the tomorrow which the bad economist yesterday urged us to ignore. The long-run consequences of some economic policies may become evident in a few months. Others may not become evident for several years. Still others may not become evident for decades.”

“Well, okay, Henry,” I said, “what the bottom line here?”

“In every case those long-run consequences are contained in the policy as surely as the hen was in the egg, the flower in the seed,” replied Henry. “From this aspect, therefore, the whole of economics can be reduced to a single lesson, and that lesson can be reduced to a single sentence. The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups.”

“From what you previously said, it’s obvious that the lesson has not been learned, Henry,” I said. “What’s the overall effect?”

“Nine-tenths of the economic fallacies that are working such dreadful harm in the world today are the result of ignoring this lesson. Those fallacies all stem from one of two central fallacies, or both: that of looking only at the immediate consequences of an act or proposal, and that of looking at the consequences only for a particular group to the neglect of other groups,” Henry explained.

“At the same time, Henry, we do live in the present,” I said. “There are economic problems that need solving in the short term. Wouldn’t this concentration on secondary consequences also cause problems?”

It is true, of course, that the opposite error is possible,” said Henry. “In considering a policy we ought not to concentrate only on its long-run results to the community as a whole. This is the error often made by the classical economists. It resulted in a certain callousness toward the fate of groups that were immediately hurt by policies or developments which proved to be beneficial on net balance and in the long run.”

“So, is this widespread, Henry?”, I asked. “And, how do we deal with this kind of error?”

Replied Henry, “Comparatively few people today make this error; and those few consist mainly of professional economists.”

“It’s the professional economists that make this error?” I asked, as I thought to myself, “then what good are professional economists?”

Conversation with Henry Part 16

Henry allowed me to bask in my self-generated warmth, but only for a moment. Still smiling, he rejoined, “In this lies almost the whole difference between good economics and bad. The bad economist sees only what immediately strikes the eye; the good economist also looks beyond. The bad economist sees only the direct consequences of a proposed course; the good economist looks also at the longer and indirect consequences. The bad economist sees only what the effect of a given policy has been or will be on one particular group; the good economist inquires also what the effect of the policy will be on all groups.”

“You know, Henry, I am wondering, how we deal with the root of this problem,” I said. “The suboptimization principle is well-known in the business world. It’s not like the distinction is not obvious. Besides, we’re not dealing with rocket science here.”

“The distinction may seem obvious,” said Henry. “The precaution of looking for all the consequences of a given policy to everyone may seem elementary.”

I wanted to ask, “Where are you going with this, Henry?” but he must have anticipated my thought. He held his hand up, palm toward me, as if controlling traffic, and continued, “Doesn’t everybody know, in his personal life, that there are all sorts of indulgences delightful at the moment but disastrous in the end? Doesn’t every little boy know that if he eats enough candy he will get sick? Doesn’t the fellow who gets drunk know that he will wake up next morning with a ghastly stomach and a horrible head? Doesn’t the dipsomaniac know that he is ruining his liver and shortening his life? Doesn’t the Don Juan know that he is letting himself in for every sort of risk, from blackmail to disease? Finally, to bring it to the economic though still personal realm, do not the idler and the spendthrift know, even in the midst of their glorious fling, that they are heading for a future of debt and poverty?”

“Well, of course they should; Henry,” I said. “These are elementary truths that they have to know; they aren’t stupid. I’m thankful that those people are distinctly in the minority or, at least, I hope they are. So, how does what you are saying play out in the field of public economics?”

The glow suddenly disappeared from Henry’s face. The moment I saw it, I knew that what was coming would not be good. I was right.

Shaking his head and sighing, Henry said, “When we enter the field of public economics, these elementary truths are ignored. There are men regarded today as brilliant economists, who deprecate saving and recommend squandering on a national scale as the way of economic salvation; and when anyone points to what the consequences of these policies will be in the long run, they reply flippantly, as might the prodigal son of a warning father: ‘In the long run we are all dead.’ And such shallow wisecracks pass as devastating epigrams and the ripest wisdom.”

Said I, “I know. I’ve heard that expression—don’t like it—never did. It’s insulting.”

Conversation with Henry Part 15

I tried to think of a factor that could, as Henry described it, “spawn new economic fallacies every day.” I drew a blank. “Okay, Henry, let’s have it,” I said.

He did, “This is the persistent tendency of men to see only the immediate effects of a given policy, or its effects only on a special group, and to neglect to inquire what the long-run effects of that policy will be not only on that special group but on all groups. It is the fallacy of overlooking secondary consequences.”

“The Fallacy of Overlooking Secondary Consequences,” I parroted. Then, thinking to myself, “That sounds like the title of a book,” I said, aloud, “Yes, Henry. I see. I didn’t express myself well before. In the realm of business, though, we would simply call ‘overlooking secondary consequences’ ‘Failing to Plan,’ also known as ‘Planning to Fail.’ With either title, it’s bad.”

I looked intently at Henry to see how he was handling my last statement. He seemed okay, so I resumed, “And, such bad planning leads to suboptimization.”

Again, I looked at Henry, who remained silent, but still attentive.

Continuing, I added, “Paradoxically, suboptimization is a result of optimizing a subsystem independently of other subsystems. Almost always, this independent subsystem optimization causes big problems. What I mean is: making an improvement of one particular subsystem without regard to secondary consequences will actually worsen the performance of the overall system.”

Henry’s face had begun to take on a glow.

Observing that, and pressing on, I said, “For example, one element in a system, in acting to achieve its own goals, may operate to constrain or seriously hamper the actions of other elements of the same system. The result is that its success in achieving its own particular goals causes serious injury to the other elements.”

I paused to see if Henry was still with me. He was now glowing brightly.

With Henry seeming to be hanging on my words, I continued, “The irony here, Henry, is that the well-being of every element in a system is dependent upon the well-being of the whole system of which it’s a part. That’s why, if it’s to preserve the well-being of the whole system, sometimes it’s necessary for one element to limit its goals and actions.” I saw Henry’s face break into a broad grin.

Finally enjoying myself, I continued, saying, “I can see where, in the distinctly different areas of politics and economics, suboptimization can have serious and widespread negative repercussions. I see this, especially, where the special interests trying to do the suboptimization gain sufficient political power to accomplish the dirty deed. This is a situation where, in spite of the doer’s intention to ‘do good’, the doer ends up ‘doing bad.’ It proves that there’s a big difference between intentions and consequences.” I paused, feeling pretty good about what I had said.

Conversation with Henry Part 14

I couldn’t believe what I had just heard. I asked myself,“Have we gone full circle on this?” I started, “Henry, what...”

Henry, his eyebrows arched, interrupted me with his hand “traffic signal”, then continued, “This is no accident...”

It was my turn to interrupt, so I gave him back his hand “traffic signal.” “What do you mean, ‘no accident’, Henry. Are you telling me that the fallacies we have been talking about are purposefully generated?”

Henry resumed, without missing a beat, “The inherent difficulties of the subject would be great enough in any case, but they are multiplied a thousandfold by a factor that is insignificant in, say, physics, mathematics or medicine—the special pleading of selfish interests.”

Picking up on that idea and running with it, I posited, “So you are saying that the fallacies in the area of economics are generated by special interests? That’s the problem—special interests?”

Henry nodded, and said, “While every group has certain economic interests identical with those of all groups, every group has also…interests antagonistic to those of all other groups.”

“Okay,” I said. “I think I can see that. Where does that line of thinking take us?”

Explained Henry, “While certain public policies would in the long run benefit everybody, other policies would benefit one group only at the expense of all other groups. The group that would benefit by such policies, having such a direct interest in them, will argue for them plausibly and persistently. It will hire the best buyable minds to devote their whole time to presenting its case.  And it will finally either convince the general public that its case is sound, or so befuddle it that clear thinking on the subject becomes next to impossible.”

The light in my mind was getting brighter. The brightening light allowed my thoughts to drift, to start cascading, to see that there was something more at work here—some additional “thing” just out of sight—some important factor—some kind of operating principle—something that is either not immediately apparent or not anticipated—a regenerative factor of some kind.

The sound of Henry, clearing his throat, broke my chain of thought. Returning to the present, I vocalized, “Henry, it seems to me that there is something else going on here, something fundamental. It has to be more than just ‘self interest.’ Is this ‘fundamental something else’ the thing you are driving at?”

With a broad smile illuminating his face, Henry responded, “In addition to these endless pleadings of self-interest, there is a second main factor that spawns new economic fallacies every day.”

“Every day?” I spouted.

Conversation with Henry Part 13

The thoughts I was having about what Henry had been telling me were disturbing. It wasn’t that what he said didn’t make sense—it did. I’m thinking that what he said “rocked the boat”, the boat containing the “common sense” that the people I know have been sailing in all their lives. I have to accept the probability, if not the fact, that the content of the boat carrying the so-called “common sense” may be bogus. In turn, that made me think that I have to try to understand better just what the phrase “common sense” really means. I’ll have to revisit that idea later, though.

In the meantime,  needing to deal with the present, I said, “Henry, my apology for getting distracted. Let me return to my example of the businessman trying to make a decision about allocation of capital resources. The only certainty in his situation is that he is working under a condition of uncertainty. Not only that, the greater the degree of uncertainty, the greater the amount of imagination he has to exercise to figure out how to deal satisfactorily with his problem. Do you agree with me on that?”

Henry nodded in assent.

I continued, “One of the elements contributing to the uncertainty he faces is the length of time over which his decision will be operative. The longer the time frame, the greater the degree of uncertainty. The greater the degree of uncertainty, the greater the necessity to ‘scope’ out possible secondary consequences. This is really a big part of what you have been talking about, isn’t it?

Assent.

“Henry, the truth is becoming more and more clear to me,” I said, “but, public projects have been around ‘forever’. Most people have been brought up to believe in the fallacies you’ve described. The sense of things I am getting is that most people just don’t know what ‘money’ really is. And, what you have been saying reflects that. I’m wondering how what you are calling fallacious beliefs came about? And, on a practical basis, where do we go from here with them?”

Henry shook his head in the negative. “It is the beliefs which politically influential groups hold and which governments act upon that we are interested in here, not the historical origins of those beliefs,” he said.

“Okay; fair enough. Please continue,” I said.

“Economics is haunted by more fallacies than any other study known to man...,” Henry began

“Hey,” I interjected. “That statement is what got us started on this whole conversation.”

Conversation with Henry Part 12

I pretended to toss a ball into Henry’s outstretched hands. As Henry pretended to catch it, I said, “Let’s look at a situation that businessmen face every day. Let’s say we have to decide between putting some capital resources into use for production or putting them into use in an investment of equal risk but greater return. It’s a fact that this kind of decision is one of the most basic, but also the most far-reaching kind a businessman can make. It’s also a fact that all decisions of this kind are based on intangible factors—things a businessman can’t actually see. At best, he has to use his imagination—along with factual information, of course.”

Henry nodded, but remained silent.

I went on, “I wonder what would have happened if the ‘private capital’ you were talking about had stayed ‘private.’ Wait a minute! The bottom line here is that all capital starts out as ‘private capital.’ To become government capital, the government has to take it out of private hands.”

A big smile, more silence...and another nod from Henry.

“This is very hard thinking, Henry”, I said. “I don’t know how people are going to get the picture you are describing. As you said before, it takes a special skill.”

Henry responded, agreeing with me, “Again we must make an effort of the imagination to see the private power plants, the private homes, the typewriters and radios that were never allowed to come into existence because of the money that was taken from people all over the country to build the photogenic Norris Dam.”

This time, it was I who did the nodding, as I interjected, “Well, these aren’t be the only examples, maybe the most visible.”

Henry went on, “I have deliberately chosen the most favorable examples of public spending schemes—that is, those that are most frequently and fervently urged by the government spenders and most highly regarded by the public. I have not spoken of the hundreds of boondoggling projects that are invariably embarked upon the moment the main object is to ‘give jobs’ and ‘to put people to work.’ For them the usefulness of the project itself, as we have seen, inevitably becomes a subordinate consideration.”

“Hundreds is more than likely an understatement;” said I, “it is probably thousands, maybe hundreds of thousands of ‘make work’ projects. The whole system of spending you are describing is a fertile breeding ground for political corruption and almost unmeasurable waste.”

Henry chimed in with, “Moreover, the more wasteful the work, the more costly in manpower, the better it becomes for the purpose of providing more employment. Under such circumstances it is highly improbable that the projects thought up by the bureaucrats will provide the same net addition to wealth and welfare, per dollar expended, as would have been provided by the taxpayers themselves, if they had been individually permitted to buy or have made what they themselves wanted, instead of being forced to surrender part of their earnings to the state.”

I thought to myself, “I have to admit it. Henry is starting to make real sense.”

Conversation with Henry Part 11

I wasn’t really ready for Henry’s somewhat less-than-enthusiastic response.

“Is it surprising”, he asked, somewhat testily, “that the champions of public housing should dismiss this, if it is brought to their attention as a world of imagination, as the objections of pure theory, while they point to the public housing that exists? As a character in Bernard Shaw’s Saint Joan replies when told of the theory of Pythagoras that the earth is round and revolves around the sun: ‘What an utter fool! Couldn’t he use his eyes?’”

“Right”, I said, in riposte. “Today’s expression is: ‘Who are you going to believe?  Me, or your lying eyes?’ So, based on what we have covered so far, I am assuming , if I apply my ability to reason to the issue, there is no difference between small projects and massively large projects. Right?”

Nodding, Henry responded, “We must apply the same reasoning, once more, to great projects like the Tennessee Valley Authority.” He then went on, his voice rising a bit in tone, the words coming more quickly and his voice getting stronger, “Here, because of sheer size, the danger of optical illusion is greater than ever. Here is a mighty dam, a stupendous arc of steel and concrete, ‘greater than anything that private capital could have built,’ the fetish of photographers, the heaven of socialists, the most often used symbol of the miracles of public construction, ownership and operation. Here are mighty generators and power houses. Here is a whole region lifted to a higher economic level, attracting factories and industries that could not otherwise have existed. And it is all presented, in the panegyrics of its partisans, as a net economic gain without offsets.” Henry paused to take a deep breath.

I grabbed the opportunity of the instant and jumped in with, “Well, it did a lot to improve the economic situation there, Henry. How do you argue against that?”

“We need not go here into the merits of the TVA or public projects like it.” said Henry. “But this time we need a special effort of the imagination, which few people seem able to make, to look at the debit side of the ledger.”

“I’ll bite;” I said, “why is it so particularly hard to do in this situation?”

Said, Henry, “If taxes are taken from people and corporations, and spent in one particular section of the country, why should it cause surprise, why should it be regarded as a miracle, if that section becomes comparatively richer? Other sections of the country, we should remember, are then comparatively poorer. The thing so great that ‘private capital could not have built it’ has in fact been built by private capital—the capital that was expropriated in taxes or, if the money was borrowed, that eventually must be expropriated in taxes.”

A light went on in my head. “Henry,”, I said, “it seems we are talking about a kind of ‘opportunity cost.’ From the viewpoint of a business, for instance, opportunity cost is an added cost of doing business. That additional cost is calculated as the difference between the actual values resulting from the use of capital, say for Project A, compared to the use of the same capital for Project B.”

Henry nodded, raised his eyebrows, looked quizzically at me, extended both his hands out in front of his body, about one foot apart, with palms open toward each other, his fingers curved slightly inward and with his thumbs up—as if he were inviting me to throw him a ball.

Conversation with Henry Part 10

If it meant the same thing as when I did it, I didn’t like that Henry had put both his hands behind his head. I knew I had to say something, but I had a slight feeling of dread when I said, “Henry, what’s wrong with public housing?”

With both his hands still behind his head, Henry replied, “I do not intend to enter here into all the pros and cons of public housing. I am concerned only to point out the error in two of the arguments most frequently put forward in favor of public housing.”

Feeling slightly relieved, I said, “Okay, Henry, what are those two arguments?”

“One is the argument that it ‘creates employment’”, said Henry.

“Well, you’ve already demolished that as a valid argument for public works projects. What’s the other argument?”, I queried.

“The other is that it creates wealth which would not otherwise have been produced.”, Henry rejoined.

“So what are you really saying, Henry?”, I asked.

Henry was quick to respond, “Both of these arguments are false, because they overlook what is lost through taxation. Taxation for public housing destroys as many jobs in other lines as it creates in housing. It also results in unbuilt private homes, in unmade washing machines and refrigerators, and in lack of innumerable other commodities and services.”

“Well, Henry, that may be so,” I said, “but projects like public housing don’t have to be paid up front; they can be financed and paid over long periods of time. What about that?”

“None of this is answered by the sort of reply which points out, for example, that public housing does not have to be financed by a lump sum capital appropriation, but merely by annual rent subsidies. This simply means that the cost is spread over many years instead of being concentrated in one. It also means that what is taken from the taxpayers is spread over many years instead of being concentrated into one. Such technicalities are irrelevant to the main point.” replied Henry.

“You’re going to have a hard time convincing some people of that. They can see what exists. You are talking about what does not exist. It is surely very hard to prove a negative.”, said I.

Henry replied, “The great psychological advantage of the public housing advocates is that men are seen at work on the houses when they are going up, and the houses are seen when they are finished. People live in them, and proudly show their friends through the rooms. The jobs destroyed by the taxes for the housing are not seen, nor are the goods and services that were never made. It takes a concentrated effort of thought, and a new effort each time the houses and the happy people in them are seen, to think of the wealth that was not created instead.”

“Obviously, Henry, the advocates for government spending are not going to touch that with a ten-foot pole” I retorted, while trying to imagine what his response would be.

Henry sniffed, then stared at me.

Conversation with Henry Part 09

As I contemplated Henry’s smile, my own words were still ringing in my ears. My mind kept jumping back and forth between Henry’s smile and my words. I could find no fault in my words, so I leaned back, put both my hands behind my head, and said, “What do you have to say about that, Henry?”

Without losing the smile, Henry launched his response. He said, “Here again the government spenders have the better of the argument with all those who cannot see beyond the immediate range of their physical eyes. They can see the bridge. But if they have taught themselves to look for indirect as well as direct consequences they can once more see in the eye of imagination the possibilities that have never been allowed to come into existence.”

“Can you be more specific here, Henry?, I said, adding “What are they supposed to see in your so-called ‘eye of imagination?”

“They can see the unbuilt homes, the unmade cars and radios, the unmade dresses and coats, perhaps the unsold and ungrown foodstuffs”, said Henry.

“You know, Henry”, I said, “You’re asking for some pretty tough stuff here. What kind of imagination does it take to see what you are referring to?”

“To see these uncreated things requires a kind of imagination that not many people have”, said Henry. “ We can think of these non-existent objects once, perhaps, but we cannot keep them before our minds as we can the bridge that we pass every working day. What has happened is merely that one thing has been created instead of others.”

“Well, then, Henry, I don’t know how you can you expect most people to understand what you are talking about if they can’t even keep it in their minds”, I snorted. “Not only are they invisible, they don’t exist.  But you are expecting people to create those images out of nothing but their mind’s eye. On top of that, what you’re saying is not common knowledge. That’s another obstacle to understanding.  Isn’t there any easier way to applying your reasoning to this situation?”

Henry replied, “The same reasoning applies, of course, to every other form of public work.”

“Every form?, I asked. “No exceptions? Can you provide another example?”

“It applies just as well, for example, to the erection with public funds of housing for people of low incomes”, said Henry.

“Now, Henry, how is it that possible? You know, to a lot of people, low income housing is a sacred cow.” Proposals for it come up all the time. What happens?”, I asked. “What’s the logic on this?”

“All that happens is that money is taken away through taxes from families of higher income, and perhaps a little from families of even lower income, to force them to subsidize these selected families with low incomes and enable them to live in better housing for the same rent or for lower rent than previously.”

“Well, yeah, Henry. That’s the basic idea, isn’t it?, I asked.

By this time, I had become accustomed to see that smile show up on Henry’s face. It wasn’t there. “Got him,” I thought.

Henry leaned back and put both his hands behind his head.

Conversation with Henry Part 08

That broad smile on Henry’s face bothered me. Or, come to think about it, maybe it wasn’t just the smile. Maybe it was the realization that things aren’t necessarily the way they seem to be, and that if I want to understand things more clearly, I have to look below the surface for secondary considerations.

“Okay, Henry, you’re on a roll. I've learned that there are things that need to be seen other than the immediate, local effect. You want to pick up from there?”

Henry nodded and said, “We can see the men employed on the bridge. We can watch them at work. The employment argument of the government spenders becomes vivid, and probably for most people convincing.”

“Well, that argument was pretty convincing to me. I can see why others would also be convinced by it,” said I.

Henry nodded again. He had been doing a lot of nodding, I noticed. He went on, “But there are other things that we do not see, because, alas, they have never been permitted to come into existence.”

“Well,” I said, my mind racing to figure what they might be, “whatever they are, they must be really important. What are they?”

Responding, Henry said, “They are the jobs destroyed by the $1,000,000 taken from the taxpayers.”

“Okay, Henry,” I said. “I can understand the $1,000,000 in taxes bit. But, what’s the story on the destruction of jobs? What’s happened there?”

Said Henry, “All that has happened, at best, is that there has been a diversion of jobs because of the project. More bridge builders; fewer automobile workers, radio technicians, clothing workers, farmers.”

“Henry”, I responded, “I’m having trouble making that connection. I’ll have to ponder that for a while, so let's put that aside for the moment. You said there were two arguments advanced by advocates for government spending ‘to provide employment’. I’ve heard the first one—the one before the bridge is built. What's the second argument?”

Responding, Henry said, “We come to the second argument. The bridge exists. It is, let us suppose, a beautiful and not an ugly bridge. It has come into being through the magic of government spending. Where would it have been if the obstructionists and the reactionaries had had their way?”

“Are you serious, Henry?”, I asked, “It’s obvious that there would have been no bridge.”

Henry nodded again, then said, “There would have been no bridge. The country would have been just that much poorer.”

A small voice whispered in my head, “He’s gonna get you again. Watch what you say.” I responded inwardly to the small voice, “I got it covered.” Confidently, I said to Henry, “For goodness sakes, Henry, doesn’t that support the argument of the government spenders?”

I am seriously getting to hate that smile of Henry’s.

Conversation with Henry Part 07

I tried to shake the sinking feeling, but I was having trouble doing it. I thought to myself, “What could Henry possibly come up with that could be a valid counter-argument to government spending ‘to provide employment’. I had to say something, so I said, “This better be good, Henry”.

Henry nodded and said, “Two arguments are put forward for the bridge, one of which is mainly heard before it is built, the other of which is mainly heard after it has been completed. The first argument is that it will provide employment. It will provide, say, 500 jobs for a year. The implication is that these are jobs that would not otherwise have come into existence.”

Exultant, I hooted, “Well, yeah, Henry! That’s what I’ve been saying. So, you really agree with me that government spending on the bridge provides jobs. That’s so easy to see.  So, what’s the problem?”

“This is what is immediately seen”, said Henry.  “But if we have trained ourselves to look beyond immediate to secondary consequences, and beyond those who are directly benefitted by a government project to others who are indirectly affected, a different picture presents itself”.

“Henry, this is not making sense to me,” I retorted. “C’mon, the bridge is being built and the workers are getting paid. So, what’s the rub, here?”

Henry took a long look at me, sighed, and said, “It is true that a particular group of bridge workers may receive more employment than otherwise. But the bridge has to be paid for out of taxes. For every dollar that is spent on the bridge a dollar will be taken away from taxpayers. If the bridge costs $1,000,000 the taxpayers will lose $1,000,000. They will have that much taken away from them which they would otherwise have spent on the things they needed most.”

Now, I am getting a little exasperated. It seems like, at first, Henry disagrees with me. Then he turns around and agrees with me. Then he wiggles around. So, I said, “And the bottom line is...”

Henry finished the sentence for me, “for every public job created by the bridge project a private job has been destroyed somewhere else”.

“NO, Henry! Wait a minute, wait a minute, wait a minute,” I protested. “Let me see if I can get this straight. You’re saying that there are only two categories of jobs—private and public, right?” Then, thinking aloud, I said, “Okay, now, if that’s so, how do you nail down who is working in which sector?” I looked at Henry and waited for his answer.
 

Henry had an expectant look on his face. But, he remained silent.

As the silence became deafening, I scrambled to continue. “I guess the answer to that question is: we should follow the advice of Rod Tidwell.”

Henry gave me a blank stare.

“You know, Henry, he’s the character played by Cuba Gooding, Jr. in the movie, JERRY MAGUIRE. Remember, what Tidwell yelled over the telephone to Jerry? It was: ‘SHOW ME THE MONEY!’”

Henry nodded.

I continued, “If we do that, I mean, if we follow the money to its source, what that must mean is: if the source of the money for the project you are working on is not the government, you must be working in the private sector. If the source of the money for the project is the government, you must be working in the public sector.” Still analyzing, I said, “Henry, the confusing thing about this bridge situation is, when you first look at it, from the outside, it just doesn’t look like it. The government is hidden from view by the contractor.”

I looked again at Henry. Nothing.

Continuing my analysis, I said, “So, based on that, the bottom line must be: even if you are working for a private contractor building the bridge, if the money for the project is coming from the government, you are, in essence, a government employee and, therefore, you are working in the public sector. The bottom line of the bottom line is: you can’t be working in the private sector and the public sector simultaneously. And, if that is so, it must mean...Yikes. What did I just say?”

I snapped out of my thinking mode to notice that Henry was smiling broadly at me.

Conversation with Henry Part 06

Well, there was no doubt that Henry’s usual calm was just a tiny bit ruffled. After his seeming to have agreed with me, I had thought my comment to him about what great things happen when government money arrives was a brilliant afterthought. Henry’s response, however, took some of the wind out of my sails and, all of a sudden, I didn’t feel quite so brilliant. In fact, I was a little peeved.

“Henry,” I said, with more than a hint of sarcasm, “are you telling me that you agree with me that certain public works are necessary but that building them can be defended only on the ground of necessity? At the same time, are you also telling me that they don’t provide jobs or add wealth to the community? How can this be? Can you provide an explanation for that?”

Henry remained silent. His brow was knit, so I knew he was thinking. I let him have the time. Then, he spoke.  “Say, a bridge is built. If it is built to meet an insistent public demand, if it solves a traffic problem or a transportation problem otherwise insoluble, if, in short, it is even more necessary than the things for which the taxpayers would have spent their money if it had not been taxed away from them, there can be no objection.”

“Well, okay. I can get that”, I responded.  “So, what’s your objection about jobs and wealth? Somebody has to put in the work to build it. That means jobs. Jobs mean payday for the workers. Payday for the workers means money coming in doesn’t it?” I thought to myself, “I’ve got him on the run with that one. There’s no way he can refute the logic.”

“But,” said Henry, “ a bridge built primarily ‘to provide employment’ is a different kind of bridge...”

Sensing a weakness in the argument, I pounced on that and, interrupting, said, “Wait a minute, Henry. How can a bridge be a different kind of bridge based only on the purpose for which it was built? A bridge is a bridge is a bridge, isn’t it?” I thought to myself, feeling good, “I gotcha on this one, Henry”.

A flicker of a scowl came and went almost instantaneously across Henry’s face. I could tell he was annoyed that I wasn’t getting the idea. “When providing employment becomes the end, need becomes a subordinate consideration,” he said. “‘Projects’ have to be invented.”

“So?” I asked.

Replied Henry, “Instead of thinking only where bridges must be built, the government spenders begin to ask themselves where bridges can be built. Can they think of plausible reasons why an additional bridge should connect Easton and Weston? It soon becomes absolutely essential. Those who doubt the necessity are dismissed as obstructionists and reactionaries.”

“Sheesh, Henry”, said I, out loud, while thinking to myself,  “I hate to admit it but, he’s got a point.  At least, I can see how finding more places to build more bridges could be pretty good job security for the government spenders.”  I couldn’t let the point die there. I pushed on, seeking to find more weakness. “Henry, bridges are being built for that reason and there have to be good arguments advanced to justify the spending for them. What arguments in favor of spending ‘to provide employment’ do advocates offer to justify spending for that reason?

Henry got that look on his face again and, seeing it, I got a sinking feeling.

Conversation with Henry Part 05

My attempt to avoid talking with Henry until I got my ducks in line had failed. I decided I had to make the best of the situation, but couldn’t quite figure out how I would do that. I took a deep breath, mentally hunkered down to weather the storm I knew was coming, and punted.

“Hi, Henry”, I said, “How’re you doing? I haven’t forgotten what we were talking about. In fact, I have been giving it a lot of thought. You know, about national insolvency and inflation. I’m having a tough time getting it all straight in my mind. It’s very confusing. Can you, maybe, simplify it a bit?”

Henry replied, “Here we shall have to say simply that all government expenditures must eventually be paid out of the proceeds of taxation; that to put off the evil day merely increases the problem, and that inflation itself is merely a form, and a particularly vicious form, of taxation.

“Well,” I responded, “ I don’t know about the “evil” part. I think I understand some of what you’re saying. What’s your point?”

Henry’s forehead got slightly wrinkled, he sighed, and said, “Having put aside for later consideration the network of fallacies which rest on chronic government borrowing and inflation, we shall take it for granted that either immediately or ultimately every dollar of government spending must be raised through a dollar of taxation.”

“Okay. That makes sense. Everybody knows that. But, again, what’s your point?” said I.

Said Henry, “Once we look at the matter in this way, the supposed miracles of government spending will appear in another light.”

I started feeling a bit defensive, so I said, “I don’t know what you mean by ‘miracle’, Henry, but, obviously, there has to be some government spending. Certain things are necessary, right?”

Henry smiled and said, “A certain amount of public spending is necessary to perform essential government functions  A certain amount of public works—of streets and roads and bridges and tunnels, of armories and navy yards, of buildings to house legislatures, police and fire departments—is necessary to supply essential public services.”

I thought, “This is better. At last, we’ve got some agreement.” So, I said, “Well, yeah, that’s what I meant.” Then, getting a brilliant flash of inspiration, I threw in, “And, think of all the jobs that creates and all the money it brings in to the community, too.”

Henry’s face went flat, his eyes narrowed, he leaned toward me slightly.  “Oops,” I thought.  “What did I just say?  We are in agreement. aren't we?”

With no hint of humor in his voice, Henry responded, “With such public works, necessary for their own sake, and defended on that ground alone, I am not here concerned.  I am here concerned with public works considered as a means of ‘providing employment’ or of adding wealth to the community that it would not otherwise have had.”

From Henry’s demeanor, I could tell he had a lot more to say on this. I also knew that I had just stepped in some smelly stuff and that what followed was going to be bad for whatever arguments I could have come up with.

“Why do I do this to myself,” I thought.

Conversation with Henry Part 04

Lately, I have been in quite a stew.  It’s about my conversation with Henry.  It isn’t going well, at all.

Henry has been making some pretty wild statements about economics.  They buck conventional wisdom, so they trouble me greatly.  For sure, what he has been saying goes against what my knowledgeable friends and acquaintances take for granted.  This is not good, I think.

What troubles me a lot, I guess, is that, under the surface, there seems to be a strange, but appealing, kind of logic to what he says.  I think what bothers me the most, though, is that if I am so smart, why is he rich and I am not?  I really don’t want to think Henry is right, because, if he is, then...  Nope, I’m not gong there.

The most I’ll say, at this point, is—for Henry to be acting the way he does—so cocksure he’s doesn’t ruffle a feather—there must be something he knows that I don’t.  So far, I haven’t been able to put my finger on it, but I’m trying to think of a way to find out what it is... and, eventually, I will.

I do know, concerning economic inflation, that any degree of it can cause severe financial dislocations.  A professional financial planner told me that, in the world of finance, they call inflation, “the silent thief”.  You can’t see it right off, but you can sure see its effects when you try to buy things in the marketplace.  Prices are going up, but income is not.  In other words, it takes more money to buy the same things today than it did yesterday.  Inflation insidiously destroys purchasing power.

Retired people, or anyone living on a fixed income for that matter, is hit with most of the impact of inflation.  That’s why a great deal of personal financial planning is oriented around how to protect one’s assets from the ravages of inflation.  Sometimes, it works.

Anyway, I had been trying to avoid talking with Henry until I got my ducks in line, but to no avail.  I don’t know if he was stalking me or not, but I turned around and there he was.  There was no escape route in sight.

Conversation with Henry Part 03

Henry acts so calmly all the time, it gets on my nerves.  I keep thinking, “Can’t he, at least, show some emotion or something?”

The last time we talked, Henry said that, according to economists, the government “can continue to pile up debt without ever paying it off, because ‘we owe it to ourselves’”.  But, he also said that “such pleasant dreams in the past have always been shattered by national insolvency or a runaway inflation”  Ever since then, I had been trying to figure out what all that meant.

Surely, government money belongs to the people, and if government spends that money on the people, then we are just spending our own money.  So, if we borrow our own money, then we owe it to ourselves.  How does that cause insolvency or runaway inflation?

Now, the term, “insolvency”, means not having enough money to pay off existing debt.  But, if it is true that you never have to pay off the debt, how can you ever become insolvent?  The more I thought about it, the more confused I got.  I found my thinking kept going around in circles.

Truth be told, that idea has never quite made complete sense to me in spite of the logic involved.  But, I never paid much attention because I just assumed that the economists knew what they were talking about.  And, as for inflation...well, that’s simple, I know that rising prices cause inflation...or is it the other way around?

I think I am going to avoid talking to Henry for a while.