Today’s WSJ features an excellent article by Stanford economics professor Michael Boskin on how politicians and other agenda pushers are so eager to use numbers to mislead people.
Boskin gives a lot of good examples; I particularly like his demolition of the “spending multiplier” idiocy:
“The Obama administration claims a dubious ‘Keynesian’ multiplier of 1.5 to feed the Democrats’ thirst for big spending. The administration’s idea is that virtually all their spending creates jobs for unemployed people and that additional rounds of spending create still more — raising income by $1.50 for each dollar of government spending. Economists differ on such mulitpliers, with many leading figures pegging them at well under 1.0 as government spending in part replaces private spending and jobs. But all agree that every dollar of spending requires a present value of a dollar of future taxes, which distorts decisions to work, save, and invest and raises the cost of the dollar to well over a dollar.”
Boskin has an optimistic conclusion: “The public isn’t believing muh of this out-of-control spin. Large majorities believe the health care legislation will raise their insurance costs and increase the budget deficit. Most Americans are highly skeptical about the claims of climate extremists. And they have a more realistic reaction to the extraordinary deterioration of our public finances than do the president and Congress.”
Great piece. Read the whole thing.
