"Most people are in arrested development and cannot use logic." Jacob.
"Competition and capitalism are hated to-day because of their tendency to destroy poverty and privilege." William Hutt
"America is unique in that our economy is totally dependent on global charity." Peter Schiff

Saturday, August 20, 2011

Cracked.com's Humorous Solutions to the Mess We are in. The Reshuffle Solution.

They had a contest about how to fix the economy in one step.

And although the solutions were jokingly offered, they feature some serious fallacies in use today by mainstream economists. A perfect chance for Smiling Dave to bring a smile to the lips and enlightenment to the mind. Without further ado, the first solution.

A brilliant idea, excuse the pun. Burn up an entire city, and get rich collecting the insurance.
The flaw, of course, is that it takes into account only part of the big picture. The guy in the photo will be richer, but the insurance company will be poorer by an equal amount. So the economy as a whole did not benefit, only a small sector. It's like saying that if a mugger steals your money, he has helped the economy, because he is richer.

Obvious at it may seem in this situation, the same flawed reasoning is used over and over, every single day. President Obama is particularly enthralled by it.  One example is his constant boasting that the govt can "create jobs". This always means the govt giving money to someone, say a favored "green energy" company, to hire people. Thus the Prez has single handedly created jobs for the new employees, who play the part of the guy in the Cracked picture holding the insurance policy. The burnt up city is played by the whole USA, because where did the money come from to hire these new green guys? It was taken away from literally everyone, because the govt has no source of income but to take money from its citizens.

Bottom line, the green guys get more money, but everyone else has less money. Which of course means they can buy less of everything, say hamburgers, which means the fast food stores will sell less, which means they will have to fire people. So that every dollar's worth of job given to a green energy guy means a dollar's worth less of job to someone else. Burn baby, burn.

Oh, I forgot to mention. Don't think we break even when Obama creates jobs. The govt reshuffling actually destroys more jobs than it creates, as is explained in Smiling Dave's blog right here.

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