Illusion Economics

One game plan for liberal politicians (and some conservatives) is to first convince you that you have it bad so they then can make the case that they can help.

There is a good example of this in my previous post. Graphs might lead you to believe one thing, but that’s blackboard economics. Look out the window and you will see a different story.

Thinking you have it good or bad is a matter of perspective. Poverty, itself, is a matter of perspective. Sure, if a politician compares the life of a poor person in the U.S. to a rich person, the poor person might feel slighted.

But, the observations from a student from India (via Instapundit) might help poor people in the U.S. find a better perspective:

[The U.S. is] An almost-classless society: I’ve noticed that most Americans roughly have the same standard of living. Everybody has access to ample food, everybody shops at the same supermarkets, malls, stores, etc. I’ve seen plumbers, construction workers and janitors driving their own sedans, which was quite difficult for me to digest at first since I came from a country where construction workers and plumbers lived hand to mouth.

Sometimes it’s hard to see the conveniences and standard of living the wealth of this country affords all people.

This reminds me of a news magazine show I saw long ago, when Brad Pitt was still courting Angelina Jolie. He said that on one of his visits to Africa he asked why they don’t have grocery stores and pharmacies on every street corner filled with remedies for basic ailments — ailments that kill people in poverty in other countries.

Capitalism is the answer. They don’t have much of it and we have more. Here’s why capitalism ensures we have ready access to the thousands of things that help improve our standard of living in ways that we are too spoiled to recognize.

Live in a country where the government or thieves (often one in the same) are going to take your stuff as soon as you have appeared to add value to it (like building a water well or fence to keep livestock) and you quickly learn that it isn’t worth expending the effort.

So, while the graphs Daniel Little uses and the speeches that politicians use may convince many that they are being slighted, in reality all of those people have a standard of living that is unsurpassed ever on this planet. Little’s charts don’t measure the value of having quick, easy and cheap access to basic rubbing alcohol that can easily prevent scrapes and scratches from becoming infected, life threatening injuries.

PS I also thought it was funny that the student from India thought we drank way too much coffee and thought it was crazy that we would spend so much on it, when we could brew it so easily and cheaply at home.

But, I think this goes back to his comment on the classless standard of living. We are generally so wealthy that we choose to hire others to make coffee for us.


I watched the movie Moneyball this week and enjoyed it. I’ve heard of the book and avoided reading it due to my own biases.

I’m a skeptic of statistical analysis, which often (even in the movie) gets confused with science.  My statistics-loving friends raved about how the book showed just how valid and effective the use of statistics is, even in a sport.

I see this confusion and misapplication of statistics as science in everything from how we run our schools, climatology, economics, fitness and diets and how we run our businesses and other organizations.  I’ve observed enough attempts at “scientific management” in my career to know that the use of it does not guarantee success — and sometimes can make things worse off (it certainly didn’t help in the housing crisis).

But, based on what I saw in the movie, this isn’t quite the case of baseball science that many people believe it is.  I realize movies simplify the story, but what I saw in the movie is more in line with what I have seen to be effective in real life:  focusing on meaningful facts over biases.

It wasn’t the use of statistics that improved the performance of the team.  Rather, it was the use of meaningful performance and output measures to overcome deep-seated biases in the coaching the recruiting staff.

This is demonstrated in one scene of the movie when the team’s talent scouts are discussing potential new players to add to the team.   This is a good-looking kid.  He has a nice swing.  Other teams like him. I like this kid.

I’ve seen this in real life all too often.  I’ve seen business programs die and good talent passed over for promotion because of similar biases.  Usually the bias is as simple as: That’s not what I’d do or That person doesn’t do the things the way I do them.  Very rarely is the true performance of the project or person even discussed.

The key insight of the statistician in Moneyball wasn’t the use of statistics, or sabermetrics, per se, but in using meaningful output measures to trump the biases. Baseball fans want wins. Wins come from scoring and scoring comes from getting on base. Good defense is a must, but not quite as important as scoring. So, instead of worrying about whether this was a good-looking kid, they’d worry more about whether he could get on base.  Facts trumped biases.