Tuesday, May 29, 2012

Political Hypothesis

Many political subjects, problems, and issues are based on imperfect mathematical models or hypothesis (that politicians do not understand). Thus, it is hard to understand why both liberal and conservative followers claim to be 100% correct on issues. Here are a few examples:

Taxes – Conservatives believe that lower taxes results in more consumer spending and creates a better environment for industries to compete and grow. Liberals believe in higher taxes to spread the wealth from the rich to the poor. Thus, the argument is does higher taxes on the wealthy hurt or help the economy? This is a complex problem that even most economist cannot accurately answer even if they create mathematical models (remember models are by no means perfect at predicting the future). It is indeed plausible that during certain years the liberal tax philosophy works better than the conservative tax model (only during good times). I have spent many hours crunching economic numbers and my results indicate the conservative tax approach works best over 90% of the time.

Climate Change – Democrats insist that climate change is manmade, while Republicans say it is not. Once again, there are very few liberals or conservatives in this country that can argue this subject with complete clarity without completely understanding the models used to calculate and draw conclusions on the subject. And what’s worse is that the only reasonable solution Democrats have to this problem is cap and trade, which will turn the U.S. economy upside down. There are other reasonable solutions, but politicians fail to look at them because they are tied to lobbyists and only care about themselves and making money.

Economic Policy – Progressives believe in a Keynesian model where government spending stimulates the economy. On the other hand, conservatives believe in supply side or trickledown economics where the consumer stimulates the economy. Keynesian approaches used during the FDR, Carter, and Obama administrations were arguably utter failures. But some economists still argue that government stimulus during these presidencies did combat potentially higher unemployment rates and obtained some economic growth. In fact; Obama is generating fictitious statistics such as “saved jobs” to defend his hypothesis that government stimulus spending is the best way to reverse an economic recession.

Entitlement Programs – Democrats follow the hypothesis that social programs and government handouts make America a better nation because it shows compassion. On the other hand, Republicans follow the thought process that government handouts do very little to place any urgency or incentive on people to better themselves. In some respects the Democrats are correct because there are always hard working Americans who are going through a tough time and require assistance. On the other hand, Republicans are correct because there is a large portion of the population that takes advantage of social programs and they provide nothing positive towards society over their lifetimes. It should be easy to find a middle ground to reform these programs, but it is impossible if everyone is hard headed.

If only politicians and Americans could understand that their philosophies are not necessarily 100% correct, we could compromise. For instance, on climate change we could all agree that carbon emissions are a pollutant and decide on a solution that does not affect our economy. On entitlements we can agree that people can use assistance from time to time but place a lifetime cap on Medicaid and Food Stamps. On economic policy we can agree to a two prong approach that consists of some government spending and some tax cuts. On taxes we can agree to cut all write offs.

In a recent study (over the past 30 years) of the most popular economic and political pundits - far less than half of their predictions were correct. And it is important to note, in this study, these so called experts merely had to predict the outcome out of two possibilities such as would Quebec succeed from Canada, Yes or No. In other words, a monkey or a two year old could prognosticate better than these experts since by the law averages they should get 50% correct. Okay, let me have it, I know this will be an unpopular post.

My Book: Is America Dying? (Amazon.com, Barnes and Noble)

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