The Best Weekend Talk Show in American 3.2

Jack & Joe review Kevin Williamson's latest column on the economy.  

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Episode Transcript

Speaker 1 (00:01):
Shock. We decided to call this the best weekend talk
show in America, and if you like it, download Armstrong
you Getty on demand from the Department of Critical Thinking.
I guess, and you know, some people I think are
just born better at it than others. I try to
get better at it, but I found both intriguing. First
of all, this was sent along by alert listener Mike,

(00:21):
and I appreciate it very might much. Mike is about
data and its usefulness and how you get it and
how you interpret it. During World War Two, fighter planes
would come back from battle with bullet holes. The Allies
found the areas that were most commonly hit by enemy fire.
They sought to strengthen the most commonly damaged parts of
the planes to reduce the number that were shot down.
A mathematician, Abraham Wald, pointed out that perhaps there was

(00:43):
another way to look at the data. Perhaps the reason
certain areas of the plane weren't covered in bullet holes
was that planes that were shot in those areas did
not return. This insight led to the armor being reinforced
on the parts of the plane where there weren't as
many bullet holes on the planes that returned. Fascinating What
a fascinating way to look at things. I had the

(01:05):
lightbulb go on myself. The story behind the data is
arguably more important than the data itself. More precisely, the
reason behind why we are missing certain pieces of data
may be more meaningful than the data we have. That's
a good one, right there. That is a good one,
isn't it? Moving along? This is the fabulous Kevin Williamson
writing his weekly Columny thing for the Dispatch. Economics for

(01:27):
English majors is a little section that he does every week,
and I always find intriguing. The headline from the Wall
Street Journals editors should know better is quote wage gains
lag behind inflation for another year. If the wage gains
were less than inflation, then there weren't any wage gains
at all. There were wage losses. A very useful concept
in economics is the real real wages, real GDP, real

(01:51):
median household income over time, ETCETERA. Real simply means adjusted
for inflation. And if you aren't adjusted for inflation, then
you're not in the realm of the real. And I
think we all kind of get this, but I love
this description. Money you properly understood is basically a record
keeping system. Manipulating the records does not change the real world.

(02:11):
If you have one hundred apples and they cost ten
dollars on Tuesday but cost twenty dollars on Wednesday, you're
not twice as wealthy in apple terms as you were
the day before, only in dollar terms, and you can't
bake a dollar pie. For the most part, I don't
care if the increased dollar value of my stock portfolio
reflects some underlying economic reality, although in the long run

(02:33):
it must. We don't think about that sort of thing
too much. But the real economy is not made up
of dollars. It is made up of apples and wheat,
and labor and engineering services and magazine articles and all
the things we make can do that add up to
economic output. A great deal of modern economic policies oriented
towards trying to monkey with the record keeping system in

(02:55):
some clever way, But in the end what matters is
how much wheat you grow, how much work you can do,
the the efficacy of the software you develop, etcetera. When
the record keeping system becomes too disconnected with the underlying
economic reality, as when, for instance, you send a huge
pile of money out of the federal coffers at a
time when economic production is in fact stagnant or declining,
then you end up with problem inflation like we have now.

(03:19):
Shunting money into the economy does not in and of
itself add to the number of acres under cultivation, or
increase the available workforce, or induce innovation creativity. Making money cheapier,
cheaper makes it easier to access credit, which is beneficial
to entrepreneurs in young firms. But another way of looking
at it is that a policy of artificiality cheap money
is a tax on savers and a subsidy for debtors.

(03:42):
That's policy you can follow for a long time, but
the correction, which are probably only beginning to really experience
these days, can be painful. It is a tax on
savers and a subsidy on debtors. Yeah, that's really interesting stuff,
and that the first part about the apples. The other
day I was talking about how my kids got a
chunk of money for Christmas, and I thought, God, that's

(04:04):
a lot of money. How much? And so I went
I used my inflation calculator on my phone to go
back to like when I was their age, to figure
out what that would have been to get a more
realistic because I still have a warped view of what
money is. I say, you know, I haven't kept up
with inflation completely changing the way I look at it.
So and then he gets to I think the most
important part of this, uh oh, get back to the

(04:25):
whole taxing savers and and subsidizing debtors thing. It sounds
a lot to me like doing some meth so you
can do an all night or and get the job done.
Whatever the job is might work in the short term,
but oh man, you're playing with fire. So anyway, his conclusion,
I think is brilliant, brilliant. What we need is an
economic policy that is oriented towards the real economy, rather

(04:47):
than a policy that's oriented towards trying to goose the
economy through government spending during slow times. But that's harder
to do because when it comes to things like fixing
the schools, developing an intelligent energy policy, and providing a stable,
long term regulatory and tax regime for investors so they
know what to expect, it's much easier and more politically

(05:09):
juicy to run willy nilly from one thing to the next,
lurching from crisis to crisis and policy to policy, as
though the lurching we're not a big part of the problem.
To begin with, stable policy, smart long term thinking. Stable
policy is the best thing you can do for any
economy and our political culture. It expects and causes the opposite.

(05:36):
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