Issue 21 Page 4 -- Economic Ignorance

Economic Ignorance

Kruschev Won't Bury Us But Ignorance Will

September 30, 2002

I was thoroughly amused with a column today (Sept. 26) at Ether Zone by Dorothy Anne Seese, The Bush Bugaboo—amused because of the subtitle: "Economics Is Not Their Thing".

Everyone write this down and memorize it: Economics is not ANY president's thing.

No Dorothy, it is "not their thing" as you imply that both Bush I and Bush II are "poor economic leaders". It is "not their thing" because a president is just one teeny little cog in the great gears of the world economic machinery.

Presidents have a near negligible effect on the status of the economy in any given year. After seeing yet another piece on this fallacy that the president sits at the "master control panel of economy USA", I called Professor David M. Currie, Ph.D., Associate Professor of Economics and Finance at Rollins College, one of the most prestigious universities in the southeast. I asked Dr. Currie to give me a rough percentage of the impact that a president has on the economy. Here is how Dr. Currie broke down the broad impact factors of the current state of an economy at any given time:

PERCENT	DRIVING FACTOR
50%	Last Year's GDP
20%	Fed Policies
20%	Government Policies
10%	International Policies

If government policies represent only 20% of the drivers of the economy, what percent of that is represented by direct presidential action? Of that 20%, is 50% Congress and 50% the president? If so, now we have a 10% effect. How much of a lag factor is involved in any direct impact? One year? Three Years? Are we now down to 5%. How much of that is indirect, not direct control? Are we at 2% now? Or, maybe zero. If so, this is still Bill Clinton's economy.

Having been schooled in economics myself in college, and sitting through lectures about "the consumption function" and "marginal propensity to consume" and it seems more formulas than in your worst Algebra nightmare, Dr. Currie and I both know that the complexities are enormous compared to this simple breakdown. However, this much is clear—the continued association the press and the public make between presidential performance and the economy has no basis in economic fact. There is little positive correlation between presidential actions and the state of the current economy.

Broad public ignorance (especially math, science and economic ignorance) is a sad fact of American life today. The press has no greater knowledge of economic reality than your typical liberal soccer mom. How often have you heard the political talk shows mention the president and the economy in the same sentence?

This association between the economy and the president is the single most outrageous example of misplaced credit and misplaced blame on a national scale.

The president simply has little or no control over these drivers mentioned. Spending proposals by the president is part of this 10%, but if Daschle hangs up court nominees, the Defense budget, and the Homeland Security Bill, do you think President Bush's spending proposals really have much direct impact on the economy? Does the president ever get what he wants? With Daschle as Majority Leader, does the president have an impact at all with the economy? Congress dilutes most of any direct impact a president could have with whatever portion a president makes up of that rough 20% figure. Ever remember any presidential proposal that was passed without some "bipartisan compromise"?

Consumer confidence, one of the key drivers affecting the economy, can certainly be impacted by confidence in the president's leadership ability. With the country split roughly 50/50 by party label, and with the 50% Republicans mostly shocked and disappointed at Bush's socialist spending spree, some degree of economic sluggishness can be attributed to Bush's liberal agenda through lower consumer confidence.

"It is difficult to believe that a president with an MBA could be so horribly ineffective at economics."—Dorothy Anne Seese

It is difficult to believe this sentence above by Dorothy made it to print.

It is difficult to believe that some feel the economy is the sum result of presidential orchestration.

It is difficult to believe that so many Americans think that the White House has a master control panel with green levers and red buttons. The Democrats think that Bill Clinton was a great president who loved the people and pulled those "green go levers" every day for middle income America. These Democrats also feel that Bush is mean spirited and enjoys pushing those "red stop buttons".

Any president can not be "ineffective at economics" any more than a president can be "effective at economics". The great majority of the drivers of economic activity are outside presidential control. It is embarrassingly sad for this nation that the American public has such broad ignorance of the principles of economics. Our nation is in grave danger since studies have shown that the electorate casts votes heavily influenced by their perception of the economy.

Leaders of our nation, responsible for our national security, are being elected by broadly ignorant masses who cast votes based on their misplaced credit and misplaced blame for the current state and recent past state of the US economy.

Kruschev said that communism will bury us. Ignorance is giving a mighty helping hand.