Beware the One-Handed Economist

I started out thinking that I wanted to write about whether the federal debt “burdens” future generations, as almost every politician from every party says it will.   But first I have to take a detour. 

The title of this blog is taken from a pained lament from President Harry Truman, or at least that’s the story.  His economists, when asked about the impact of some policy, would tell him “well, on the one hand it will have this effect, but on the other it will have this (opposite) effect.  So it all depends.” Finally he exploded, wanting a straight answer: “I want a one-handed economist!”

But if you ever find a one-handed economist in that sense, an economist that can only see one possible answer to any real question, run hard the other direction, and count the spoons.  Because economics isn’t that easy.  There’s almost never an answer that doesn’t come with lots of conditions.  One of the first phrases you are introduced to in econ 101 is “ceteris paribus”, Latin for “with all other things the same”.  It’s used as the universal condition on simplified models.  Here’s a simple model, or a simple assertion that is elevated in econ-speak into a law: the quantity demanded of a good will decrease as the price rises, ceteris paribus.  What other things could change in a model as simple as that?  Well, the quality could change---the demand for cars decreases as the price rises, but if the low priced car is an old Edsel, and the higher priced car is a new Mercedes, that could change the result.  The environment could change: the lower priced car could be in a very dangerous part of town, or could be stolen, or could be offered by a less trustworthy dealer, or it could be an obvious lemon.  A thousand things could change. But ceteris paribus, if nothing changes but price, then this simple model says that the dealer will sell more of them at a lower price than at a higher price.  Is this simple model true?  Well, it depends…most of the time it is, but there are situations where even this simple model, this economic "law", is not true.

This dithering from economists seems to frustrate people, who claim that other disciplines are able to come to firm principles, so economics should too.  How can it be called a science if it is so fuzzy in its results?  So let me defend indecision a little bit, before we get on to the main topic.  Let’s look at an example from physics, about as no-nonsense and decisive a discipline as there  is:  how fast does an object fall toward the earth?  “Ha”, you are exclaiming, “that’s a trick question, because the speed of an object changes as it falls”.  Well, yes, falling objects accelerate; my high school physics teacher told us that an object accelerates at 32 feet per second per second.  So right up front all of us physics students had to ask a few questions before we could answer that question if it popped up on a quiz: how long has it been falling?  Did it start at zero speed toward the earth?  Of course my teacher was lying, anyway.  That’s really just an approximation.  Wikipedia refines it by one more decimal place: their entry says that the acceleration of a falling object is 32.2 feet per second per second.  But with that aside, the assertion is that if an object starting at rest is free to fall, it will accelerate from zero speed at that rate. But…what if the object is a bird, or a hot air balloon?  Oh…you thought I meant an object that did not counter gravity with its own means of propulsion in the opposite direction.  Or: you meant that objects fall at that rate in a vacuum.  But I didn’t say either of those things in my original question; if you fell into line in this pop-quiz you assumed it. 

Ok, let’s accept that the object is adrift in a near-vacuum.  What if the object is a rock in near vacuum somewhere in the vicinity of Jupiter?   Ah, another assumption: the object accelerates at 32.2 ft/s² if it is near the earth’s surface.  Or what if the object is Jupiter itself?  Are the rock and the planet accelerating toward the earth?  Well, they’re trying, but other things keep getting in the way.  The rock is more powerfully accelerating toward Jupiter than it is toward Earth, so on the whole it may be accelerating away from earth.  And Jupiter is more powerfully accelerating toward the sun than toward earth. 

Ok, so let’s assume that it’s an object in a vacuum near the surface of the earth. Another quick pop-quiz: does it accelerate at the same rate at the equator as it does at the North pole?  From another Wikipedia entry: “At different points on Earth, objects fall with an acceleration between 9.78 and 9.82 m/s² depending on latitude, with a conventional standard value of exactly 9.80665 m/s² (approx. 32.174 ft/s²).”

Drat.   32.174 ft/s² ???  Approximately??? And it changes across the surface of the earth?  Is nothing easy anywhere??

The point is that there is no simple answer even to that simple question: if you are told that objects accelerate toward the earth at a fixed rate, and then you blame physics when a hot air balloon released in the atmosphere of Gliese 581 G fails to behave in exactly that fashion, you have misunderstood physics.  Because the right answer to how fast an object will accelerate toward the earth is “it depends”.   On the one hand, the gravitational attraction between the object and the earth will cause it to accelerate toward the earth.  On the other, things like wind resistance, buoyancy, distance from the earth, and even latitude on the earth’s surface, and a thousand other things, will change the rate of acceleration. 

Even physicists have two hands when they are providing simplified answers to people who need answers in a hurry.

Now on to the federal debt question in the next post.