Economic stupidity

Townhall.com ^ | May 1, 2003 | Walter E Williams

[NonValueAdded]

Imagine that you and I are in a rowboat. I commit the stupid act of shooting a hole in my end of the boat. Would it be intelligent for you to respond by shooting a hole in your end of the boat?

[snip to fit the excerpt rule; read the full article. NVA]

Both of these scenarios are applicable to the Bush administration's 30 percent steel tariffs imposed last year. Those tariffs caused the domestic price for some steel products, such as hot-rolled steel, to rise by as much as 40 percent. The clear beneficiaries of the Bush steel tariffs were steel industry executives, stockholders and the approximately 1,700 steelworker jobs that were saved.

Tariff policy beneficiaries are always visible, but its victims are mostly invisible. Politicians love this. The reason is simple: The beneficiaries know for whom to cast their ballots, and the victims don't know whom to blame for their calamity.

According to a study by the Institute for International Economics, saving those 1,700 jobs in the steel industry cost American consumers $800,000 in the form of higher prices for each steelworker job saved. That's just the monetary side of the picture. According to a study commissioned by the Consuming Industries Trade Action Association, higher steel prices have caused at least 4,500 job losses in no fewer than 16 states -- over 19,000 jobs in California, 16,000 in Texas, and 10,000 in Ohio, Michigan and Illinois.

[adorno]

The beneficiaries know for whom to cast their ballots, and the victims don't know whom to blame for their calamity.

The victims are of course the immediate casualties of the wrongheaded economic policies, but the beneficiaries are also victims, except not in the near term.

As long as the beneficiaries don't understand the long term effect of bad policy, then they'll believe themselves to be the winners. But, in the long term, they too will lose when other products and services have to increase their prices to make up for the increased cost of the beneficiaries' products. With higher costs for their products (and services), the market for those products decreases and there will be the need to cut the number of jobs in the industry of the perceived "beneficiaries". The consequences will have been longer term, but they always will occur.

However, there will always be those that, even when they understand the consequences of bad economic policy, they will only care about "getting theirs".

The one group that cares the least about consequences and long term harm are, of course, the politicians who only care about the immediate gains they can make with an economic policy which gains them favor with a particular constituency or industry. Eventually, the stupidity of bad economic policy catches up with the economy and the people within that economy. Politicians will, in the proverbial sense, cross that bridge when they get to it. But, when the bridge has to be crossed, we get more bridges that need to be crossed at a later dates.

When the consequences to politicians are negligible or none, like with the mortgage and financing crisis in the last year, then we'll be getting more idiotic economic decisions along the way. It took a long time for the mortgage crisis to build up, and most people out there are not capable of understanding how we got to the current economic mess. The wrong people get blamed or the people aren't smart enough to understand. And now, the politicians who gave us the economic mess are in the position of spinning their way out of blame and are well placed to give us more of the same.

When the people are so dumbed-down that they wouldn't understand the consequences of bad policy, then we're well positioned to be put into much deeper doo-doo by the politicians who only care about gaining votes or voters.

[familyop]

"And a nuclear world war will not do for Obama what WWII did for Roosevelt in 1941."

Did you notice that the GDP started going up in 1934? That's true, though, about nuclear exchanges not being likely to help the economy, unless those are followed by forced production (as during WWII) for more conventional warfare. But then with the policies that our leaders have practiced over the past couple of decades (fears of high freight fuel in certain favored constituents and their pocket politicians), they're just appeasing and waiting for the enemy to further build his nuclear arsenals and start launching.

As for the Democrats, it would be funny, if they were cornered into drafting a few million fatherless brats for a real war.

[FreedBird]

Congress approves spending. The Democrats have been in charge for 2 years.

[Oatka]

Looks like we’re close to the ‘30 level. Hopefully it won’t take another 10-11 years to get back to “normal”.

[richardtavor]

The actual unemployment rate at present is 13.9%, as measured by the U-6, Bureau of Labor statistics—this was the measure used during the Depression. It includes everyone in the official unemployment rate plus ‘marginally attached workers,’ who are neither working nor looking for work but say they want a job and have looked for work recently, and people who are employed part-time for economic reasons — they want and are available for full-time work but took a part-time schedule because that’s all they could get. We could get to 33% unemployment under this definition in a hurry. I just pray that the unintended consequences of the pig trough spendulus package won’t be as severe as they look to be.

[familyop]

"I just pray that the unintended consequences of the pig trough spendulus package won’t be as severe as they look to be."

I agree. Most of it is being spent to keep the same unproductive government and other special private interest employees of the various states on payrolls.

[familyop]

"Looks like we’re close to the ‘30 level. Hopefully it won’t take another 10-11 years to get back to 'normal'."

It will, if we don't get to manufacturing useful products. The vanities of most of our current special government and business leaders appear to be boundless, so that's probably the way that it will be.

[Conservativegreatgrandma]

I remember Gramm’s analogy very well. He spent a lot of time in Iowa when he was campaigning for president. I was a Gramm supporter.

[ex-Texan]

Rising Jobless Rates Hit 98% of Metro Areas

High jobless rates are hitting all across the nation. Some regions have been hit harder than others. I still believe government is playing games with unemployment statistics.

Excerpt:

Indiana's Elkhart-Goshen region saw its unemployment rate soar to 15.3 percent in December, up a whopping 10.6 percentage points from December 2007. The region has been bruised by layoffs in the recreational vehicle industry. Hundreds of workers have lost their jobs at RV makers such as Monaco Coach Corp., Keystone RV Co. and Pilgrim International. * * *

Dalton, Ga. — home to many flooring manufacturers and nicknamed the carpet capital of the world — racked up the second-largest increase. The region's unemployment rate jumped to 11.2 percent, up 6.2 percentage points from a year earlier, as fallout from the housing market's collapse has cut demand for carpets and other household goods. * * *

Danville, Va., which saw its jobless rate bolt to 11.5 percent, had the third-biggest increase of 5.6 percentage points. The area's economy once relied primarily on the tobacco and textile industries and has not yet recovered, interim City Manager M. Lyle Lacy III said Wednesday. * * *

Many of the highest jobless rates were concentrated in California, which got walloped after the booming housing market went bust. * * * El Centro, Calif., continued to lay claim to the nation's highest unemployment rate — 22.6 percent. The jobless rate is notoriously high in the area, where many unemployed are seasonal agriculture workers, including some who live in Mexico.

[ExTxMarine]

“Matter of fact, there’s no mandate in the Constitution for our legislature to spend as much time legislating, as they do.”

Heck in Texas our legislature only meets every two years - or in an emergency. They create budgets that are good for two years and adjust as needed.

There is NO reason for this to be a full time job unless of course you are having hearings on whether there should be a college football playoff system or the all important did Clemens use steroids!!???!?!?!?!!

Our elected officials put the A$$ in asinine!

[ViLaLuz]

“Imagine that you and I are in a rowboat. I commit the stupid act of shooting a hole in my end of the boat. Would it be intelligent for you to respond by shooting a hole in your end of the boat?”

Not if the goal is to sink the boat.

[Windflier]

Heck in Texas our legislature only meets every two years - or in an emergency. They create budgets that are good for two years and adjust as needed.

There is NO reason for this to be a full time job...

Absolutely.

The US Congress could probably get all of their work for the year completed in a month or two.

All of the rest of the time they're in Washington is spent picking our pockets, meddling in our lives and our economy, and figuring out new ways to subvert the Constitution.

[Tolik]

Dr. Walter E. Williams Nails It every time !

His archive: http://townhall.com/columnists/WalterEWilliams

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