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Does Not Compute

Recently I was listening to a conversation about unions. As expected very quickly into the conversation someone mentioned that “unionization rates were really high in the mid-20th century” and that this was also a time of unprecedented US economic growth.

Well, it certainly was a time of robust economic growth. But why must we regularly employ “arguments” like this – they are among the hardest for you to defend (what is the counterfactual) and they open us up to incredible amounts of inconsistency. Why? Two reasons. One of course is that the conclusions do not follow from the premises, but second and more important is because that same “argument” can be used in even more interesting ways.

Here is another example I run into a lot: “tariff rates in the 19th century were a lot higher than today, so much for your so called “free-trade” being important for economic growth!” (the late 19th century saw even faster growth IIRC than the mid-20th.

Here is another example I run into a lot: “the top marginal income tax rates in the US in the mid-1950s were near 100% and not even that prevented the US from achieving massive economic growth.”

Here is another example I run into a lot: “the US has had debt burdens as high as today, if not higher, and not even that prevented robust economic growth.”

Without an exegesis on what is wrong with such Post-Hoc thinking, let me toss out a couple of analogous statements that I would ask defenders of the above positions to also defend:

  1. Well, the US economy grew rapidly during the early part of the 19th century, indeed it became a major world power by the end of this period. And this was a period when slavery proliferated in the United States. Clearly slavery is not any serious burden for the economic vitality of a country.
  2. Well, the US economy grew rapidly during the late part of the 19th century even as the so-called “Robber Barons” pillaged the American people. Clearly the emergence of massive monopolies does not pose any serious burden on the economic vitality of the country (see this for fun reading).
  3. Well, ┬ásure, maybe you think environmental protection and cleanliness is important, but before 1970 there was no EPA. And indeed, economic growth before 1970 was far more robust than it was since 1970. Indeed, all of that pollution didn’t seem to stop life expectancy from rising by 40 years over a 150 year period, it did not stop income from growing by a factor of 12 over a 200 year period. What’s the fuss all about?
  4. Well, the US was a deregulated free-market paradise before 1914. It’s growth up ’till then was far greater than its growth since then.

I think you get the point. Readers are encouraged to add their own either to the first list or the second.

5 Responses to “Does Not Compute”

  1. Aaron McNay says:

    Here is a quote from Derek Thompson’s blog on The Atlantic’s web page that I think would fall under the first list:

    “Republicans say government should do less to mitigate the effects of income inequality. You might agree, or you might disagree. But if you find yourself arguing that job creators can’t afford higher taxes, consider that the last time the tax code did this little to reduce inequality, we raised taxes. And then the 1990s happened.”

    http://www.theatlantic.com/business/archive/2012/04/a-short-history-of-modern-taxation-in-4-acts/256244/

  2. Trapper_John says:

    @Aaron: such twisted logic reminds me of this bit of loveliness from the Church of the Flying Spaghetti monster…

    “You may be interested to know that global warming, earthquakes, hurricanes, and other natural disasters are a direct effect of the shrinking numbers of Pirates since the 1800s. For your interest, I have included a graph of the approximate number of pirates versus the average global temperature over the last 200 years. As you can see, there is a statistically significant inverse relationship between pirates and global temperature.”

  3. Harry says:

    Trapper, ice cores in Greenland explain the reported decline of piracy, except for the recent rise of piracy in the Indian Ocean. This all should be reported to the UN, where they can discuss it in between meals, and issue communiques.

  4. Harry says:

    To the first list, I would add the notion that government (in our case, the Federal Reserve) can control interest rates. This may seem an esoteric subject, but trillions of dollars have been spent, are being spent, and will be spent in this cause. Do they think they believe that no one will catch on?

    Maybe they have, everybody sitting on mountains of cash, waiting for everybody to run for the door, the financial gunslingers hoping their horses are close by.

  5. sherlock says:

    How about pooblic education?

    Rizzo, I think you start referring to public goods that aren’t really public goods as “pooblic”. Nice ring to it.

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