Two Stories from David Friedman on Issues of Political Economy

 

Following his advice, I had to preserve two stories he recently told on social media. Specifically, on his Google+ page he recounted these two stories of his experiences in American politics. As someone with strong experience around DC, I can see many modern parallels. Without further ado:
 
I have two stories, both from a summer c. 1966 when I was a congressional intern.

1. The congressman I worked for had put in a bill that would have abolished a large chunk of the farm program. By some odd coincidence, the agriculture department published a study of what the consequences of doing so would be.The study concluded that the savings to the government would be less than the reduction in farm income. The reduction in farm income was due to a drop in prices, but the study made no mention of the resulting savings to the consumers, which was larger than the reduction in farm income.The study also included a discussion of the effect of eliminating price supports on crops used as inputs for raising animals. The conclusion was put in terms of “poultry producers will feel the result immediately, since the flocks can be expanded quickly, lifestock producers more slowly.” That made it sound as though poultry producers would be hurt immediately, lifestock producers more slowly.

What they were describing was a situation where production costs fell. Poultry producers would get only a short term windfall, since they could expand flocks pretty quickly, driving prices down to their new equilibrium. Lifestock producers would get a longer term windfall, since it would take much longer to expand production and until they did prices would be above the new, lower cost. So they were presenting a situation where one group benefited a little and another a lot as if one group was hurt a lot and the other less.

Second story:

My congressman ended up lending me for four days a week to the Joint Economic Committee, which lent me to their project on state and local finance, which was also wearing several other hats. It was producing a fact book that was supposed to tell the lay reader the basic facts relevant to state and local finances.I discovered a fact. For the previous decade, as the baby boom kids went into school, the ratio of K-12 students to taxpayers had been rising, which meant that maintaining constant per pupil expenditure required increasing per taxpayer revenue. The ratio had peaked and was about to start going down as the baby boom came out of the classroom and into the work force. That meant that constant per pupil expenditure could be maintained with falling tax rates, or increased expenditure with constant tax rates.My fact was unquestionably true, since it was a demographic fact about people already born. It was unquestionably important, since schooling was the single largest expenditure of state and local governments. The people running the project denied neither of those things but refused to include the fact in the fact book, because they wanted readers to conclude that state and local governments needed more money, and the implication of that particular fact was that they needed less.

They were academics, and on the whole I liked them. Being young and innocent, I was shocked to discover that they would do deliberately dishonest work.

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