Wednesday, December 26, 2012
GETTING THE NUMBERS RIGHT
Getting the numbers right. In the economy some spend too much and go under, while others save and get ahead. We make numbers calculations all the time: can I afford a new car? Can I pay for a soda with my lunch or should I stick with water? Each individual does this and some get it wrong. Can one planner do it for everyone? What if they get it wrong? Then the society has a famine, as happened in the Ukraine in 1936 and in North Korea over the last two decades.
But sometimes an economic planner will get it right. Joseph correctly read the Pharoah's dream and put food in silos to get them from the fat through the leaner times.
Summarizing economist Ludwig von Mises, Sylvia Nasar writes, "Take the question of whether the cost of making the car is more or less than the amount consumers are willing to spend on it. To figure the cost, add up the hours of labor, pounds of steel and rubber, marketing, distribution, and other inputs, multiply by their prices, and add everything up. ... Does it make sense to produce cars? If your cost is less than your revenue, you can keep on making them" (277).
When we're doing a Sudoku you are adding up numbers that aren't relevant outside of the box. If you get one number wrong (as I didn't in the one I did above) then nothing adds up. But there are no real consequences except a mild feeling of irritation. But if there is too much borrowing versus the amount of actual production in the national spending process the whole economy can crater, as it did in 1929. Today our debt is soaring, and there are hidden new costs to do with Obamacare that make it very difficult to "add everything up" in terms of labor costs. Will the whole charade collapse? If so, you can be sure the media will say it's something that George W. Bush said or did that caused it. No blame can ever be attached to their Wunderkind with the enormous ears.
I wish that Obama wouldn't have taken this risk with the economy. It doesn't seem worth the trivial pursuit of leftist fame he might garner if the poor are covered. I preferred the emergency room. That too was a mindless stopgap but at least it didn't dragoon the entire economy into a Mad Ludwig's Castle which will possibly send the debt so high the country will lose even more of its credit rating. Obama basically has nothing to lose. He lives for today and he knows if everything goes wrong the media will cover for him, and it will be blamed on someone else just as Benghazi was blamed on Hillary. Obama, by definition, can do no wrong.