Will Talking About Tradeoffs Save Our Economy?

Posted on March 3, 2014
Filed Under Critical Thinking, Economics |

We live in a world of soundbites, which is unfortunate because it means the deep, rich, nuanced view that accurately reflects most significant issues in the world has been lost. Why read an in-depth analysis that requires 12 minutes of your time when you can just retweet a couple 140 character zingers on the same topic and feel like you’ve won a political battle? Our short attention spans, our neomania, and the media’s monetization of our hypernovelty seeking have discouraged us from reading any in-depth analysis on anything, and discouraged the media from reporting on anything in a deep, rich, and nuanced manner.

As a CEO, I had to get up in front of my company at the beginning of the year and talk about our 4 big goals. These are “the only 4 things we care about this year.” It’s a lie, unfortunately. There are really about 400 things I care about this year, but most people aren’t ready to have an ongoing discussion about the relevance, priorities, and dependencies involved in a whole bunch of subgoals. I have to keep things simple, just like the media. So, I have to admit, it isn’t just a problem with the media. It’s a problem with humans, with society, and with the way we think. We crave clarity and simplicity. Unfortunately, it’s killing us.

You know the straw man caricatures of each party as well as I do. The liberals believe that if we just made the rich pay their fair share and took care of the people at the bottom, that the economy would thrive. The conservatives believe that if we just kept tax rates low and let the market take care of things, the country would be fine. But it’s all wrong.

The truth is actually very complex, and what has been hidden from us, in our soundbite world, is the nuanced understanding of these issues. But there is hope. The CBO analysis of a minimum wage hike last month was the first time I ever remember a national discussion about tradeoffs. The analysis basically showed that such a hike would do two things:

  • 1. Lift 900,000 people out of poverty.
  • 2. Kill 500,000 jobs.

Wait, you mean we can’t get our economic cake and eat it too? Of course we can’t, but that didn’t stop each party from jumping on the point that most resonated with their ideology.

In my mind though, this was a huge step forward for the United States. For the first time, we are looking at an issue not as a panacea, but as something rich and deep and nuanced. Which would we prefer… 1.4 million people who are employed but under the poverty level, or 900,000 people employed above the poverty level but 500,000 people not working as a result? Employment is important because it builds skills and lets people eventually move to higher paying jobs. But working at a level that doesn’t make ends meet can also make things seem hopeless for the people in those positions. It is a difficult decision.

Government issues, particularly those that affect the economy, are actually full of tradeoffs that we don’t usually discuss. Studies show that unions destroy jobs, yet get higher pay for those who are employed. An article about North Carolina’s unemployment benefit experiment shows that killing benefits did encourage more people to seek work, but many of those people are employed in jobs way below their skill level just to make ends meet. A recent study showed that inequality, which is supposed to be the main topic of the next election, might more to do with changes in mating patterns in the U.S. rather that the traditional rich get richer rhetoric. Love vs. Money tradeoffs.

The truth is that these issues, and most interesting issues really, are very complex and difficult to understand in a 140 characters, or even a 700 word editorial. As a nation, I’m hopeful that this CBO discussion of economic tradeoffs will encourage people to talk about politics and economics in this way going forward. It’s all about nuance and tradeoffs, and unless we understand and embrace that, we can’t be successful at solving the problems we face.

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