To Solve Problems, Sometimes You Have To Ignore What People Think

Moneybox
A blog about business and economics.
April 16 2012 10:57 AM

To Solve Problems, Sometimes You Have To Ignore What People Think

Bill Keller defends the honor of centrists and hails the good sense of swing voters, citing a recent Third Way advocacy poll (PDF) as a guidepost. He also says that swing voters "are looking not for a checklist of promises but for a type of leader—a problem-solver, a competent steward, someone who understands them and has a convincing optimism."

That certainly seems about right to me. When I hire a dry cleaner, I'm not looking for a checklist of promises, I'm looking for someone who knows how to get my suit clean. When I hire a plumber, I want someone to fix the toilet. When I buy a computer, I want it to work. The idea that voters have a basic desire to have the country run smoothly and want to hire politicians to get the job done is very intuitive and I think also backed up by the evidence. But note here that HP doesn't consult an opinion poll when it's considering what kind of CPU to put in its computers. Nor do plumbers conduct national surveys to figure out which tools should be used for which jobs. Firms do employ survey research and focus groups all the time to try to get a sense of what consumers are thinking, but no business is going to succeed unless the firm itself contains some kind of specialized knowledge in how to do things. We have gains from trade precisely because people work more efficiently when they specialize more. If you did everything as a giant participatory collabortation, we'd all be immisserated.

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One of Third Way's findings is that "[t]he plurality of Swing Independents said the best way to strengthen our economy—a subject of utmost concern to them—was to reduce the deficit" but people who think this is the case are mistaken. Deficit reduction can bolster the economy by giving the central bank leeway to reduce short-term nominal interest rates without sparking fears of inflation. Currently, however, nominal short-term interest rates are too close to zero to be reduced. To bolster the economy you need either a fiscal lever (higher deficits), lower interest rates (higher inflation), a total reframing of the monetary situation (nominal gross domestic product targeting), or supply-side structure reforms that are unrelated to fiscal policy. In an ideal world, Swing Independents would know that this is the case. But it's very plausible that they no more know how to boost growth in a zero-constrained interest rate environment than I know how to repair an air conditioner. The challenge facing policymakers is the same as the challenge facing an HVAC repair guy, namely to fix the problem. A politician whose best idea about how to obtain problem-solving knowledge is to consult an opinion survey has a very unsound business model.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.

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