Wednesday, January 10, 2007

I like to think of myself as a pretty well-read and well-educated person, but like all realists I understand that there are some things about which I know little and understand less. Like economics.

I've always been puzzled by the way economic data can be tortured to force it to support any desired conclusion. It never ceases to amaze me that an accountant can use two different accounting systems on the same set of data and show a profit with one (for the benefit of the stockholders) and a loss with the other (for the tax collector). I often wonder which sort of accounting system our Federal government uses to come up with its budgetary policies.

My friend Jake and I long ago agreed to disagree on the efficacy of Republican trickle-down economic theories: Jake confidently cites various authoritative studies which purport to show that cutting taxes actually increases government revenue; in a recent Washington Post article, I read of three different and (evidently) equally authoritative studies which show that revenue declines in the long term after the initial modest gains. Who's right? Can my economist beat up your economist?

These are important questions, especially because the numbers our government is crunching include the money you and I pay in taxes. If we ran our personal finances and kept our books the way the government runs its own, we'd probably be in jail. The government is spending tens of billions of dollars on the war in Iraq, but that money doesn't show up in the Federal I've noted before, it's all being done on the basis of emergency appropriations, which don't get the level of Congressional scrutiny that the main budget does. This is a budgetary option the average citizen doesn't have.

I wish I knew more about economics, and I'm trying to learn...but it's tough getting my mind around the endlessly-flexible concepts. German and Russian grammar I can understand, economic theories are something else.

More thoughts on economic theory and practice later. For now, have a good day...however you choose to crunch your numbers.


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