There’s not much room for common sense and logical thinking in the world of economics. If there were, then too many people would be qualified to discuss it, which would put the high priests — our pundits and policymakers — out of business. So it’s important that the whole field be riddled with paradoxes and logical leaps that your peasant mind could never grasp.
For example, you might think that after a period of excessive debt and spending the answer would be savings and paying down your debt. But what you don’t understand is that you’re just falling into the paradox of thrift. Good thing we have wise politicians to institute anti-saving policies just when we might fall into that trap.
You might also be surprised that at a time when your income is dwindling, you actually want to see higher prices for goods. Again, a total paradox, right?. Sure, most of the time inflation is called an evil, but god forbid prices might actually go down, and we’d enter a (queue the ominous music) “deflationary spiral.” Good thing the government knows to print up more money just as thing seem to be getting more affordable.
What about government spending? Economists love to make themselves sound credible by talking about all their super-scientific multiplier effects, like how for every dollar spent on bridges, you get a $2.354378009 improvement to GDP. So the solution is to always spend like crazy, right? Well, not exactly because what really improves the economy are what Keynes called our “animal spirits” — confidence and such. And how do you foster “animal spirits”?… Hey, look over there, someone’s, uh, breaking into your car!
Then there’s what we’ve been discussing all morning, all those broken windows. Despite the fact that war, broken windows, hurricanes, tornadoes are all obviously bad things, things that negatively impact our well being, economists always remind us that they’re actually good things, because they’re, you know, stimulative. It’s as though we can have a “good economy” with a growing GDP, but everyone feels worse off.
So from now on, don’t worry your little head when something doesn’t seem to make sense. There are so many paradoxes and multiplier effects, that your feeble-minded “common sense” is rendered useless. Better leave it to the experts.
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