Pond Life: Why care about American economics? [or Why Gay Marriage Matters]

[I’m afraid this one is long. Take a deep breath, think about it, then remember to feed the cat and decide not to read it. It’s all lies and conjecture anyhoo.]

Edit- Now published somewhat more soberly on The Moon Project

We come to it at last, they great hiccup of our time.

Economics, economics, economics. That’s what the 2010 UK election was about, and it seems to be the main thrust of the American one. Unemployment and jobs figures are the battlefield. Gross Domestic Product and AA+ credit rating are the weapons. The Federal Reserve might be a potential ally, and the Deficit is the vulnerable baggage-train. The important debates are about fiscal stimuli, quantitative easing, limiting spending, improving taxation, stimulating growth, removing restrictions, facilitating entrepreneurship. Education, healthcare and welfare are all seen through the frame of national debt and uncertain future. To quote Gandalf, “The board is set. The pieces are moving.”

Wait, really?

That’s the debate? Economics is the debate?

Ohhh no.

Don’t worry, I’m not going to bang on about my whole voter-education idea. I’ve already pointed out how ridiculous it is for voters with little or no understanding of an issue to vote on that issue, and how weak this makes Western democratic models in choosing leaders.

No, this time I’m talking about how absurd it is that economics is the focus of the election. Don’t get me wrong. Economics is important. Although there’s healthy debate over what a healthy economy looks like, almost any politician, be they Centrist, Anarchist or Fascist, would be in favour of ‘a healthier economy’. Given our recent recession/credit crunch/slump, mass-unemployment etc, the issue is certainly pressing. But should a party’s economic plan and record really be the dealbreaker in any election? Is that even possible?


I say no for two reasons.

1) Economics is inseparable from ethos and ‘politics in general’.

2) Even if economics did exist in a vacuum, it is too complex, international and fallible to be the prime criteria for your vote.

For these reasons, I’m going to argue that ‘social issues’ are far more important when deciding whom to vote for, using the Gay Marriage debate as an example.

[Disclaimer: I have limited economic training. Say half a module. And, in the space of one blog which spans most of modern politics and almost the whole history of economics, I don’t even come close to the complexities I do know, let alone my ‘unknown unknowns’. So this is necessarily reductive. I also happen to think it’s right. That’s why I’m writing it.]

Economics is inseparable from political ethos

The term ‘economics’ comes from the Greek οἰκονομία (oikonomia, “management of a household, administration”) and everyone called it ‘political economics’ until c.1900, when apparently they all got lazy.^^

Some modern commentators might find amusing the irony that Greece invented economics, since they currently seem to be destroying it.

It started to become seen as a social science, or even just a ‘science’, even though it’s based on predicting the actions of ‘economic agents’, i.e. ‘people’. The goals of modern economics are irreducibly political. Whether you want economic growth* isn’t really an issue (you can’t imagine anyone proclaiming “We support stagflation!” or “We love recession!”). The issue is what you mean by growth, and how that is achieved. A high GDP, or a high GDP per capita, can mean a whole range of things. You can get a high GDP by having a few super-rich people with everyone else in poverty.  You can get high GDP by everyone being pretty affluent. You can get a high GDP (in theory) by the state owning all big industries. And mixes of the above.
A party/candidate’s economic manifesto will appeal to one/a mix of the above. In the American election, both Mitt and Obama are ceaselessly talking about promoting the fortunes of the ‘Middle Class’.  This is fairly meaningless, as some 66% of Americans think of themselves as Middle Class, and their income/job/education situations are so varied that it’s impossible to legislate for all of them. Oh well.  [Apparently 71% of Britons self-identify as MC too.]

The Upperclass Twit of the Year has been taken down a peg or two, and the smaller Ronnie no longer ‘knows his place’.
Oh, the 70s.

In the UK and America, the main ethos-tension is between ‘leaning towards socialism’ (however weak that socialism may be), and ‘leaning towards conservatism’ (the same). Basically, American Democrats and British Labour and Liberal Democrats are more willing to tax more (including income taxes, corporation taxes, inheritance taxes) and with that money, spend more on the state’s institutions, typically including education, health, welfare, work-schemes and infrastructure. The American Republicans and British Conservatives, to some degree, would keep the taxes lower and spend less on the state.

There, economics. Both of the parties justify their plans with very valid and (often) respected economic theory. Those leaning left point out that good educations, positive welfare schemes and good healthcare all promote a more active workforce, increasing growth. The right tend to accept that their stance means more people will be poorer, but argue that their model encourages business and endeavour, meaning those who work hard will rise to the top, and those who are lazy (or ‘evil’) will suffer for their sins. And that taxes punish those who work hard and reward those who are lazy.

They’ve both got big name economists and historical examples, too, as do less prominent parties. Pretty much everyone nods to Smith, because he was right about much of the basics. You get winks at Malthus and Ricardo, borrowings from Marx (seldom attributed), and more recently, 20C kingpins gain centre stage.

John Maynard Keynes. I won’t even go into how his theories mighhhht have contributed to all wars since 1930. EEK

Lord Keynes became the boss of the Left when he talked up deficit spending to relieve recessions, and is often** credited with giving Franklin D Roosevelt the tools for his New Deal (and world war) to pull America (and the world) out of the Great Depression. Equally, Friedrich Hayek, a strong critic of nasty governments everywhere, has become the idol of many who oppose government interventionism and think that economics should (broadly) be left to operate itself – giving ammo to ‘Liberals’ who support laissez-faire free market capitalism. Their opposing views are summed up in a biased but hilarious youtube song-series hereand here. If you are of a certain literary persuasion, Ayn Rand is on Hayek’s side, mostly.
All of their arguments are palatable (except Rand’s). All of them have data and good stuff to back them up. Indeed, each have historical examples as ‘proof’ of their efficacy – the postwar boom for Keynes, the post-80s boom (when much financial regulation was cut by Thatcher and Reagan) for the liberals. But, of course, both had different ideas about what ‘healthy economy’ should be. Rand essentially thinks a few brilliant people are Nietzsche’s Ubermensch, have no responsibility or obligation to community, friends, family or society, and should be allowed to fuck everyone over for money. [How’s that for a balanced summary?] Many neo-Keynsians (e.g. postwar Labour governments) were convinced by the importance of 100% employment, seeing this as a great social leveller, allowing large government debts to accumulate through failing state-owned industries to avoid sacking people.

You’d better hope you’re in the 1%, bitchas

Similarly, for a variety of reasons, the Chicago School (inc Milton Friedman and current Federal Reserve boss Ben Bernake) are in favour of free markets. In the US especially, it’s easy to see how this ties in with the ‘American Dream’ of a pioneering man (invariably, a man) setting out on his own and building a profitable company from the ground up. A hilarious right-wing stereotype includes the man who ‘was born in a wooden lodge that he’d built’. People who credit this self-determination principle, and who deny or minimise the importance of [List: state infrastructure, peace, favourable trade relations, stable interest and fiscal spending, educated workforce availability etc] are thus predisposed to favour free-market thinking, whereas those who accept or support this more state-centric thought are more likely to favour taxation and spending. Especially when (and this is a historical truth) someone else is paying.

So, in intermediate-conclusion, political economics is ‘housekeeping’, and that fundamentally requires you to at least have an idea of what your house should look like, even before we examine the validity of your plan to get the house to that state of affairs. When you’re choosing a candidate on his/her economic plan, you’re also making a statement about who should be taxed, and how much, and who should benefit, and how much, and how powerful the state should be, and how the country should act on an international state. It’s fine to make a choice based on this spending ethos, just don’t think you are only voting for ‘general prosperity’.

2. Even without these problems, economics is too fallible to be your main voting criterion

Very, very broadly, economics is creating models to explain how people have acted with money, and using these models to hypothesise how they will act in a given situation.

As you might have noticed in the late 1920s, or the 1970s, or the early 1990s, or 2008, these models can often be ‘wrong’. Indeed, an article cited in Wikipedia looked: “at ‘consensus forecasts’ (the forecasts of large groups of economists) that were made in advance of 60 different national recessions in the ’90s: in 97% of the cases the economists did not predict the contraction a year in advance. On those rare occasions when economists did successfully predict recessions, they significantly underestimated their severity.”

That’s some pretty damning stats.

Yes, I know Vince Cable predicted the crash. So did other economists

Give him a fucking cookie.

. But far from a majority. And they’re pretty split on how to solve it, and what’s going to happen. [And let’s not even go near the swamp of terror that is the Yuro-peon Quest-shun.]

Now, bear my disclaimer in mind when I say this; economics is very informed guesswork. But still guesswork. All the data we have from history is imperfect, and incomplete. No single historical regime consistently followed any single economist’s advice. Economics does fantastically clever things to help it guess the future, but is very fallible. A BIG reason is that no nation is entirely autarkic, and in practice, the UK and America are very much global, prey to domestic and international developments including but not limited to:
– Europe. Greece might’ve gone down anyway, but the Credit Crunch (largely caused by Wall Street) certainly helped. And now Greece (and Italy, Spain, Ireland) are causing uncertainty for the Eurozone, which causes uncertainty for everyone else. It is almost impossible to tell how Obama or the Con-Dems would’ve done without the European problems, but everything would probably be better. And guess what – no matter how good our leaders are at economics, they have very limited control over other countries.

Ahh, the black toxic nectar.

– The price of oil. Most developed economies depend on oil. Most developed economies are net-importers of oil. The whole picture changed in 1973 when OPEC (The Organisation of the Petroleum Exporting Countries…i.e. mostly the Middle East) embargoed the West, and sent USA oil prices from $3/barrel to $12 almost overnight. They were reacting to the West’s support for Israel in the Yom Kippur War, if you’re interested. The embargo only lasted a year, but in that time managed to cripple Detroit, brought in a global recession, changed US consumer opinions public transport, speed limits and engine efficiency, and turned many factories onto coal-dependency. Hooray.
– BRIC. Brazil, Russia, India and China. Multi-volume book can and have been written on what these countries’ growth does to our own, but to summarise: makes our governments consider protectionism (that is, punitive taxation on imports) and hardline foreign police; allows capitalists to make bigger profits by employing BRIC citizens for lower wages than Western citizens, thereby contributing to unemployment; terrifies some politicians into hyperbolic rhetoric; floods various sectors with imports so cheap that Western businesses cannot compete (or are forced into ‘luxury/elite quality’ branding); ‘economic tourism’ meaning many of the West’s ‘best minds/entrepreneurs’ move to BRIC to make big profits, rather than building businesses at home, effectively denying the domestic economy growth. There are far more I either can’t explain or don’t understand. As if I understand the ones I’ve mentioned…

– ‘Bubbles’. Bubbles are economies or sectors which receive high investment based on high market evaluations, but turn out to be ‘empty’ and cause collapses. The most recent big bubble was the ‘dot.com boom’. Some people won, lots of people lost. It’s very hard to tell what is and isn’t a bubble, until it has ‘burst’. I’ve read various pieces which opine that Facebook, social media in general, the Kindle, and e-books, are all bubbles-in-waiting. Who knows?

There are other interesting crits of economics as a discipline. Feminist Economics (and other) attack the mainstream for its assumption that agents act rationally and selfishly. Most econ fails to give serious attention to class, gender, unpaid-work and historical concerns. Lots of micro-economics is also very much influenced by the ‘vogues’ of behavioural psychology, which is itself a far from perfect science.

Basically, economists have an impossible task. They have to create a model for ‘how the whole world works’, but they don’t have the luxury of knowing ‘when and where the next war will be’, ‘who will invent the next big thing’, ‘when X commodity will run out/become abundant’ and so on. It’s a little bit like a blind person playing poker. Or darts. Yeah, darts. You cant tell the man everything you can see about the dart-board, but s/he still won’t really know where he’s throwing that fucking pointy thing.

So there. I’ve shown that economics is both too partisan, and too random, to be your prime voting criterion. What else is there, then?

Foreign Policy
Foreign policy is certainly very important. It influences defence, trade relations, immigration, ideas dissemination, blah blah blah. However ‘the future’ pans out, it’s useful to have a leader who knows how to get what he wants on an international stage, by crook or by hook. Or by being polite and reasonable. This is one of many reasons I’d oppose Romney, but you already knew that.

However, I don’t think foreign policy can ever be the salient voting criterion. This is partly because, like economics, FP is largely reactive and teleological (consequences-based). It’s also because foreign policy is based on reasoning that we cannot understand or evaluate. Even after Wikileaks wonderful/terrible works, there are tons of international decisions which seem to have been taken based on information we simply don’t know about.
Take Obama for an example. I open myself up to huge charges of idealism here, so make them if you like.

“Buzz – I’m just a harmless male bee! Buzz…”

His 2008 platform was hugely optimistic on foreign policy issues. He was going to respect other countries, he was going to stop extra-ordinary rendition, stop torture, close Abu Ghraib, build better trade relations, create a consensus on climate change, work against international poverty and all the rest. But? But he hasn’t. Abu Ghraib was downsized but is interrogating same as ever, possibly worse. Rendition continues. The Afghanistan pullout date is Bush’s pullout date. He sent forces to Libya, and ?possibly to Egypt?, plus ?possibly funds to Syria? That’s serious meddling in other nations’ sovereignty. What? Oh yeah. Drone strikes. Loads of them. Killing civilians and violating other nations’ airspace. Plus, what? Oh yeah. Bin Laden. Sending elite assassins into a foreign country, without that country’s permission.

Why did he do all these things? Well, even if you think he was lying in 2008 (which I genuinely don’t), he’s still losing liberal votes through all his FP and human rights abuses. To take Abu Ghraib specifically, the only reason I can imagine him carrying it on is that he’s seen some seriously secret spy shit, some CIA ‘more secret than top secret’ intelligence which shows that OK, we don’t have enough to charge these guys, and yes, it’s terrible and illegal to hold them in this way, but seriously, if we let them go, lots of people will die. I really can’t imagine another reason for him not to follow through on his pledge.

Oh wiki commons. You are so resourceful. 😦

Similar reasoning, of course, helped justify the Iraq War. Sure, the Intelligence happened to be total bullshit, but Blair and Bush really believed Iraq was a chem/bio threat. Probably. What these examples illustrate is that Foreign Policy again can’t be the deciding issue, since we don’t know all the data. How can we evaluate which candidate will be best in given situation Y, when we don’t actually know what situation Y is?!

So what can we choose our governments by?***

That’s’ right.

Homosexual Marriage

Well, social policies anyhow. Homosexual Marriage (from now HM) is just a handy example. See, social issues are demonstrative of a party’s actual thinking mechanisms. Even if you argue that the Democrats and Lib Dems are cynically supporting HM to gather homosexual votes, that still shows a greater willingness than more right-wing parties, who apparently don’t want their votes. Ever.

Most social policies, HM no exception, are not teleological. Arguments for HM don’t tend to start ‘If we adopt HM, then in ten years’ time everyone will be better educated and £3000 richer’.

Who, me? Call people who oppose Gay Marriage ‘bigots’? No, not me! I said ‘big goats’

They are reasoning-based. They are values-based. And they demonstrate the type of reasoning which I’d like a party to use when selecting its stances on any issue. I would trust a party that supports gay, minority and women’s rights on the economy, the military budget, the environment. Why? Because they seem to think similarly to me based on the same basic facts. Even if I disagree with the Lib Dems’ economic plans, that’s essentially me betting on black and them on red. But on an issue like HM or Lords Reform, stem-cell research or abortion, their lovely lovely critical, analytical, secular thinking is demonstrated. And I jizz in my pants****.
The other important point about social policy is that it’s much harder to change tack. I have zero problem with a politician making a huge U-turn on an economic or foreign issue – if new data or developments happen which show that they were obviously wrong, then a U-turn is the only sensible option. I’d actually respect that quite a lot. [Hear that, Gideon?]
But social policy? How can a bunch of stats suddenly convince you (and by ‘you’ I mean Mitt Romney) that suddenly totally changed his mind on abortion, climate change, HM and gun control? Whereas changing tack on data-based spheres may be wise, honest and noble, a huge change of heart on such social issues can only be read as cynical. A reaction, not to facts which show those principles are flawed, but to facts which show you fucking need to draw Tea Party support away from crazy Rick Santorum.

How does all of this affect the UK?

Thanks, I’m glad you asked.

Basically in every way you can think of. Firstly, we will have elections in a few years. We face pretty similar issues. I will (unless someone shows me the flaws in my reasoning), be voting according to this rubric.
America is the world’s only superpower, a huge trading partner of ours, our largest military ally, and the quirks of Wall Street pretty much dictate what goes on everywhere else. What America does affects us all the time. In the UK we are bombarded with US culture, from TV shows (Simpsons, Friends, Family Guy, American Dad) to music (Avenged Sevenfold, Metallica) to film (virtually all films) to books (Twilight, Safran Foer, Egan). The arms and space races between America and China affects global relations, the UN, our economy, loads of stuff. We are in Afghanistan, and were in Iraq, largely thanks to US pressure. Our embassy in Khartoum, Sudan was attacked this week as a reaction to a film made in America. Our stock market did well this week thanks to the Federal Reserve’s quantitative easing declaration. Oh, and the Western World might be wiped out if Iran manages to build a nuke, and the USA+Israel provoke it.


^^ Welllll, sort of. Mill differentiated ‘applied economics’ – the production of wealth – from ‘social economics’ – how that wealth is distributed in a nation. I’m not sure it’s that easy to cleave, but in any case current discourse, doesn’t recognise the distinction, so let’s ignore all of Mill’s excellent work.

*Bill Clinton popularised the term ‘grow the economy’ in the 90s. It took a dip in usage, but is not back strong. This is one of my many pathetic, petulant, pretentious pet hates. Grow is not a transitive verb – we can’t say “I grew my children” or “I grew my house a new conservatory”. When it is used transitively (“I grew some beans”) the euphemism is clear – you didn’t actually do anything. If everyone would start saying ‘promote growth’ or ‘help the economy grow’ then I would be marginally happier.

** By no means unanimously. In fact, there is massive debate as to whether, and to what extent, the New Deal worked at all.
Moreover, people both side of the fence tend to say that no government has acted in a purely Keynsian way, because virtually everyone ignores the ‘Part II’ of his strategy. Sure, he says when a country is bust you need to borrow more, spend on public works, get everything moving again and employ people. But when the economy is growing he says you need to pay off those debts and start saving. In practice, most governments either keep spending or get voted out. Awkward. Some people might say Bill Clinton’s famous budget-balancing is the only real example of part II working. And work it did.

*** I’m talking priorities here. I’d never seriously suggest anyone should vote with zero consideration for a party’s economic OR foreign policy stances. That would be crazy, not least because economic and foreign policy stances can help tell us whether the candidates are, themselves, crazy.
**** This isn’t to deny that there are valid arguments against homosexual marriage. I’ve been long-term convinced by one, but still support it short-term. Long term, marriage is a defunct institution. Get rid of it.

Watch me fail on Twitter and collapse around Facebook.

8 thoughts on “Pond Life: Why care about American economics? [or Why Gay Marriage Matters]

  1. Personally I believe in a system where social and economic policies are voted for separately. I believe it’s very important to have both, but I think it’s ridiculous that if you want to vote for a party that agrees with your religious conservatism you also have to vote for the party who’s spending and taxation goes against everything you believe in.

    Now economic policies make sense on large scales as that’s where you see a lot of the benefits. However I see no reason why the whole of the country needs to be dictated by the same social laws. Why can’t these be decided much more locally?

    • That’s very interesting James. How locally are we talking? Would you support more devolution (as in Scotland and Wales) or are you talking about an even smaller, county or town level?

      Perhaps you should found a party that cherishes religious conservatism and your own spending model. I’m sure that’d stir things up!

      • Yes, very local. To fit with what we have, I would probably just suggest all social issues were decided within local council.

      • With what boundaries? Say, one local council allows homosexual marriage, and its neighbour legislates sharia law? What if a HM couple were offered jobs in a council area where their marriage was illegal? Surely some level of centralisation is needed?

  2. Hey,

    A couple of points:
    1) You seem to presume that any action path leads to about the same result in terms of overall wealth, just the distribution is affected. I strongly disagree. I think the drastically different outcomes is partly why the USSR couldn’t keep up, and that certain economic policies work better given a set of circumstances. So the highschool economics example is that there were differing economic troubles just after the great depression, and in the 80s. That’s why Keynsianism didn’t work in the 80s, but did work in the 30s (it is roughly to do with how much aggregate demand is the cause, versus aggregate supply). I even think most people would be happy to have an essentially equal society if that gave the same economic result. The trouble is that this doesn’t.

    2) BRICs is more complicated 😉 Very simply, it’s about allocating resources efficiently. Imagine you can 1 work in a factory, or 2 work in tourism. Now imagine that we need the tables from the factory, and the fact someone works in a factory ads £100 to the British economy. Also imagine the fact that someone working in tourism in Britain ads £50 to the British economy. Now imagine someone working in a factory in India costs the British economy £20. Therefore, option 1 ads £100 pounds to the economy, while option 2 ads £130 to the economy, as it is more efficient that the person in India works in the factory and you work in tourism. It’s not just for the wealthy, it’s about working most efficiently. And contrary to much of the public opinion, I believe we’d be significantly worse off if we 1 hadn’t traded with the BRICs, and 2 we’d be losing ground to them almost as fast (but with significantly worse growth for us). The only real way around it is to maintain a colonist system and stay in control, which I do not believe we were happy to do.

    I do like your point about it being more difficult to change opinion on social issues though (although, as you say, Romney definitely has).

    • I certainly don’t think that different action paths lead to the same amount of overall wealth, and I’m sorry if it looks like I do. Your examples are very valid. I just don’t think it’s possible for the average voter to even begin to evaluate which one will maximise wealth.

      Vis BRIC, I did point out that I knew everything was more complicated…I actually invested in Brazil and Russia myself (on someone wonderful’s advice.) I think my point still stands that the rise of BRIC, especially China, creates econ circumstances not entirely within UK/USA control – unless, as you say, we recolonise everywhere. Which would suck.

      Thanks for commenting 🙂

      • Of course not everyone fully understands the consequences of certain policies, but I think that’s why we tend to see similar policies in western europe between different parties (within big lines, the tory / lib dem gov does similar things to what labour would’ve done as ppl realise that’s roughly right). But that means that a strong divergence of economic policies does lead to a valid point to vote.

        Then indeed, an increase in relative BRIC power equals a reduction in relative power of us, which means we can control the world less and less.

        Anyway, that’s all I can think of saying :p

  3. Pingback: FIGHT NIGHT LIVE: Archangel Carey vs. Nazi Zombie Faggots | Haywire Thought

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