When I was in high school I literally confused economics with ecology, and things didn’t get a lot better in college. That best explains why I’ve always felt hampered during any discussion of "the economy." Of course ignorance has never stopped me from opening by big trap before so I do endure.
Evidence of the endurance of my ignorant discourse is my exchange with David Boyd in the comments of this post. What this discussion drove home to me is that while I do have a rudimentary understanding of economics (and I think I have some pretty accurate instincts about the Bush Administration, but I digress) I don’t quite grasp the cause and effect of varying economic factors. It occurs to me that I don’t like government deficits because:
- Debt is bad. My wife tells me that whenever we run up a credit card bill and she knows about this stuff because she’s an ECON major!
- All the experts say that deficits are bad, but to be honest I don’t really know why they think it’s bad. I’m taking their word for it.
Then I came across this on the BusinessWeek’s Economics Unbound blog:
Tyler Cowen has an item titled Do future generations pay for deficits?. He starts off this way:
Assume that government spends some money today on
consumption. That money could have been spent on a durable bridge, but
it wasn’t. Some current people benefit from the consumption and future
generations get nothing.
Above and beyond that effect, do future generations bear the burden of deficit spending?
But of course, there’s a big problem with his scenario. The latest
budget pegs the FY 2006 deficit at $423 billion. But federal spending
on major physical capital, research and development, and education and
training–all long-lived investments–is estimated at $425 billion.
We are not borrowing to finance consumption, we are borrowing to finance long-lived investments.
So a better question might be: Do future generations benefit enough
from these investments to justify the cost of the borrowing?
Now I’m really confused. It doesn’t help that I think maybe the blog’s author has engaged in an old debate trick here of changing the basis of the argument. My question to him would be, "Aren’t we borrowing to finance consumption AND investments?" But what do I know?
I came of age during the era of Reaganomics, which I believe was also called supply-side economics, whatever that is. I seem to remember there being a great deal of disagreement between the economists from varying schools of thought so I came to the conclusion that this might not be an exact science, which it turns out is an oxymoron since every day some scientific proof seems to be overturned, disproved or improved. Whatever, it’s not exact.
So I know that there’s a lot that economists disagree on, but I’ll be damned if I understand it. I feel like I’m listening to two people argue in Latin; I can tell by their body language that they disagree but I have no idea what they’re talking about. Which leads me to the conclusion that I need to get at least a rudimentary understanding of the language of economics. Maybe I’ll take a course at one of the local schools, but in the interim can someone recommend a book on economics that works on the kindergarten level?
