Every time I see an article about the debt limit increase or the budget fights, I have to take a few deep breaths to calm down. To put it bluntly, this national conversation is stressing me out. So I decided to learn more background information about economics. (Because information is power, right?)
I attended a panel at the Urban Institute called What Policymakers, the Public, the Press, and Parents Need to Know About Economics... in 90 minutes or Less. The most important thing that I learned at this panel was that competing economic theories can sometimes both be true.
To explain economic theory to us, one panelist used the example of blind men checking out an elephant. One man feels the tusks, so he believes an elephant is hard, with sharp ends. Another feels the tail and thinks it is soft. Another feels the foot, and another the side. Each man is correct about how an elephant feels, but none gets the whole picture. Economists tend to see the elephant through the part they’ve studied, and though they aren’t necessarily wrong, they aren’t completely right either.
So how does this apply to the situation right now? Well, I think it underscores the fact that simply cutting taxes will not make the economic situation better. We need a wide variety of solutions, so we can try to cover as much of the elephant as possible.
The other important fact that I learned was that something that is good for an individual might not be good for the economy. For instance, if one person saves, that’s good for them. If everyone saves, that’s bad for our economy, which relies on consumer spending. Conversely, something the government does (like creating regulations) may be bad for one person, but good for the economy as a whole.
The things I learned at this panel didn’t necessarily make me feel calmer about the state of affairs in Congress right