Ignorance, Squared

Economics, Democracy and Rocky Boats

I am generally a fan of democracy, warts and all. Most conservatives are. After all, the key difference between modern day conservatives and liberals is that conservatives understand that there is such a thing as human nature, and it is by definition a mixed bag. We are imperfect and imperfectable. Given this, it is safest to disperse power across as wide a spectrum as possible. So although I am certain that “the people” will make a lot of wrong calls, I am equally certain that they will on net steer the nation more safely than any given set of elites.

That’s the theory. In practice, the American people can make it awfully difficult to be enthusiastic. One of the benefits of being “On The Ground” in flyover country is that one can see how much coastal elites are misrepresenting “the people.” But lately we have been displaying an atrocious collective ignorance - often coupled with a puzzling stubbornness - about a wide range of hot, hot issues. Not even the coastal media really appreciate how stupid we are on some issues.

Oil & Economics. I’m not sure that I have ever seen mass stupidity on this scale regarding any other subject. A large, large number of people honestly believe that the oil companies are “causing” high gas prices. It does not matter how ridiculous this is, they stubbornly cling to it. These aren’t left-wing-conspiracy-theorist-Bush-hating-moonbats. They are my neighbors and coworkers. Sure, they know about supply and demand - in theory. Sure, they have a vague sense of the things going on in the world that are driving up demand. Sure they know that we’re not drilling in ANWR. But none of this matters. Even otherwise intelligent folks do not hesitate to ignore all of that and blame the oil companies. It’s all about their “greed”.

Two examples of profound economic ignorance accompany this. The first is that there is some “right price” for a commodity like gasoline, and that anytime the price rises higher, it must be due to some evil forces at work. But the whole point about prices is to send information about the relative availability of a product. Low prices mean “buy more, produce less.” High prices mean “buy less, produce more.” Prices do not contain any moral worth. A high price tells us something very valuable, even as it may inconvenience our lives in small ways. Another interesting thing about prices is that even the highest prices represent the absolute lowest price the market can bear. All of the energy of the free market drives prices to the lowest sustainable level. Gas companies can no more “raise” the price of gas above this level than the President could “order” it to be lower.

The second is that there is such a thing as “obscene profits.” Apparently it is deemed an awful thing that profits rise as prices rise. Apparently the correct response of “big oil” would be to lower the price of gas by a penny so that their profits stay “low.” Apparently profit margins that are right in line with other major industries (and lower than many) becomes “obscene” when the aggregate amount sounds really, really big.

The Trade Deficit. I have also begin to hear increasing “concern” about the supposedly burgeoning “trade deficit.” Even many conservatives - especially those of the Catholic/evangelical stripe - are expressing worry that this is a bad thing. There is a certain “fairness” component to this concern that is remarkably bleeding-heart-liberalish. Not to mention childish. Not to mention ignorant.

The very idea of a “trade deficit” is a hoax. It is based on the notion that, like gas prices, there is some “ideal” balance between imports and exports, and any time we tip away from that balance it represents a problem. This has tremendous populist appeal. Especially among the unionized working base when wrapped in the notion that we are somehow “exporting our jobs.”

The jobs market, like the gasoline market, actively seeks the best balance between supply and demand. The production of things that derive their value primarily from the availability of lots of cheap, unskilled labor will inevitably move to those parts of the world with lots of cheap, unskilled labor. Other things derive their value from the application of educated, skilled labor and advanced technology. Those things will be done in more advanced countries, like the U.S. This constant shifting of resources works inevitably towards lower overall process and higher overall productivity. And increased prosperity.

To somehow argue out of one side of our mouths that we need to better protect our unskilled manufacturing jobs, while arguing out of the other side that we need to permit illegal immigration because there are many unskilled jobs that “Americans won’t do” is absurd.

We Americans buy lots of fine, cheap electronics, toys, household goods and clothing from overseas. All we do in return is send them a few spare bucks. Unemployment remains low, prosperity remain high. Why is this a problem?

The common thread I sense in these two issues is that we are a very spoiled people. By my reckoning, higher gas prices have been costing me about ten bucks a week. Not exactly the stuff of crisis. But we don’t want reality to rock our boat. To lose a low-paying low skilled factory job and have to perhaps retrain and find a higher skilled, higher paying job is seen as an onerous burden, and unfair to the core. We don’t want reality to rock our boat like that.

Democracy demands a mature citizenry. We must be able to handle a little inconvenience now and then with pouting and demanding government action. We need to be able to steer the ship of state through sometimes rocky seas without panicking. We need to grow up and demonstrate that we are worthy of democracy.

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