Glen Beck is Wrong About Economist

Radio and now television personality Glen Beck has recently grown fond of ridiculing economist who in recent years have made some really dumb predictions. The type of economist Beck likes to lampoon generally comes from government such as the Securities and Exchange Commission or private corporations or associations like the housing industry. Beck quotes one of the bought and paid for economist from say 2005 predicting the housing boom will last forever then smears all economist as dumb worthless boneheads. Well I guess it’s my time to come to the defense of economist so here goes.

Economists are like any business degree. Economics is one of a group of business degrees that include accounting, finance, marketing and so forth. Economist want the nice cushy job with the fat spending account just like anyone. So when Mr. Pump up housing prices association man offers young bright economist from proper university a sweet job Mr. Young Economist will search and search his massive educational and mathematical knowledge to give the boss what the boss wants. No surprise there. But if economists are trained in the “truth” then how do they get so far away from it?

The first little dirty secret is justifying economic distortions and sometimes outright robbery with the Pareto efficiency, or Pareto optimality. This little concept is an important concept used by millions of economist to justify social engineering. It is used in economics with broad applications in game theory, engineering and the social sciences.
Given a set of alternative allocations of, say, goods or income for a set of individuals, a change from one allocation to another that can make at least one individual better off without making any other individual worse off is called a Pareto improvement. And there you have it. The magical gateway drug economist the world over to justify some special treatment for their industry or political point of view. Similar to congressmen and women justifying their special pork projects as beneficial and hey it’s only a few million here and there. Of course the problem is a few million here and there, a few million special programs here and there, then a few tax breaks here and there and pretty soon add up into a huge headache and is anything but a Pareto improvement. More like a Pareto pain in the ass and drag on the wallet.

This concept is captured quite accurately in the movie Office Space where the disgruntled workers Peter Gibbons, Michael Bolton, Joanna and Samir devise a scheme to only take fractions of pennies from corporate accounts on the assumption that no one will notice and no one will get hurt while they get rich. Here is some commentary from the hilarious movie:

Peter Gibbons explaining the corporate account skimming as equivalent to: “Um, the 7-Eleven, right? You take a penny from the tray.”

Joanna: From the crippled children?

Peter Gibbons: No, that’s the jar. I’m talking about the tray, the pennies for everybody.

Eventually the scam ends up into an enormous very obvious corporate swindle forcing the mastermind Peter Gibbons to admit “You know, corporate accounting is sure as hell gonna notice $305,326.13, Michael!”

The Pareto effect put to use in the movie Office Space with hilarious consequences. Unfortunately in the real world we all pay for these little improvements in the form of higher taxes, higher consumer prices, and distorting income tax corporate and personal laws that do not allocate resources efficiently. In other words Mr. Beck its hogwash designed to sooth the minds of economist justifying the very types of abuses they were taught not to inflict on other humans.

What do economists know? The best tax is a simple flat or fair tax. Corporate taxes are nothing more than a tax on people, investment or dividends. Corporate taxes are a complete waste of time and resources if for no other reason than people end up paying the tax in one form or another. Capital gains taxes are a waste of time and money. Do we really want to tax capital formation? Pretty illogical when you think about it. I personally want my employer to raise and invest capital. It means higher productivity and higher wages.

So if I were advising Obama and I wanted energy cap and trade, socialized medicine, social security, Medicaid, Medicare, welfare and all the rest of the goodies? I would tell him is unrealistic but if he was hell bent on pursuing the madness the cut corporate and capital gains taxes to zero, raise personal taxes for those making over $1 million to 50% and cut tariffs to zero. Simplify the tax code to a progressive flat tax and eliminate payroll taxes. This flies in the face of his communist upbringing and education. Clearly it would strengthen segments of private industry. So Obama would reject it.

So what does Obama really want Mr. Beck? The bail outs are designed to reward friends and inflate the currency making huge segments of the population dependent on the federal government. Inflation wipes out seniors and the middle class first then works it was up. The idea is to have just a very few very wealthy capitalist at the top that will cow tow to the whims of the federal government much the same as in fascist Germany from 1933 to 1945. Same old same old to an economist.
Obama is a communist by upbringing and education. He clearly believed in Marxism and all its tenets. If he had the power he would implement communism overnight. His problem is the capitalist are to strong in America. Everyday the Dow Jones drops is another day people become agitated with his brainless economic policies. He is rapidly running out of good will. 10% unemployment is just around the corner and as more people lose their jobs pride in the messiah will turn to anger and contempt. People cursed Jesus and they will curse Obama. The magic carpet ride will soon crash.

Obama knows it. His communist brain boy David Axelrod knows it. And the deals with the capitalist pigs like GE will be made. And the legacy of the communist Obama someday will be as a fascist. Just like Hitler and Mercedes Benz. How ironic that for all these years Democrats have been accusing Republicans of being fascist and our first true fascist government will have been consummated by none other than an affirmative action half Negro communist. How appropriate.
So Mr. Beck we economist do know economics. We know more than you do what is going on and how it is being accomplished. Some of us are communist like former Nobel Prize winners Leonid Vitaliyevich Kantorovich and Tjalling C. Koopmans. Some are fascist like Nobel Prize winning economist Paul Krugman of the New York Times and some are libertarians like Milton Freidman.

What truly astonishes most of us is the utter ignorance the American public has of even the most basic concepts of what is in their best interest. We see year after year, decade after decade politicians exploit people ignorance on a wide rage of issues like school choice, social security, Medicaid and Medicare, welfare, work rules. Some of us year after year try to inform people of why and how this or that works for or against them and year after year we are ignored or worse made pariahs in the business community. I mean what farmers organization is going to hire an economist who argues against farm subsidies? And there you have it. We try to inform people but are shut out by politicians and the media who don’t want to listen. And we need to feed our families. So we compromise and do what we have to do.

I would ask you Mr. Beck to invite Senior Fellow at the CATO Institute Dan Mitchell to your show as often as you can to explain economics. Mr. Mitchell is a wonderful man who is very honest in his economic analysis. And if you pressed him really hard I bet he would give you some very accurate predictions of what will happen in the future to our country if Obama’s economic policies are implemented.

So Mr. Beck lighten up on the economist. We are just guys and gals like you trying to make a living fighting the ignorance and dogma of the day just like you. Show us some love once in awhile dude.