For more than three decades, Grover Norquist has been pushing his Taxpayer Protection Pledge as if it’s the answer to every financial headache the nation faces. Last week he told a small Anchorage audience that one way for Alaska to avoid new taxes is to sell off state owned assets, including pension funds, land, and infrastructure. Former Lieutenant Governor Mead Treadwell loved the idea because, like Norquist, he sees the problem through the narrow lens of rational economics.
Treadwell is now the president of Commonwealth North, the group that invited Norquist to speak. He referred to him as “one of the nation’s most influential conservatives.” But although Norquist has made a lot of noise with his one-trick-pony, he hasn’t gained much of a following beyond libertarian leaning conservatives focused on fiscal accountability. That’s part of the reason why he and Americans for Tax Reform, the advocacy group founded in 1985, haven’t accomplished anything.
The GOP’s “cap, cut and balance” pledge signed by former Gov. Sean Parnell in 2011 didn’t fare any better. Nor has the fiscal gimmickry offered by the other party, such as the balanced budget amendment former Sen. Mark Begich signed onto in 2013. Like the pledges, that ignored the military spending elephant in the room.
But here I am applying rational arguments so I can jump on my soapbox. Just like so many of us have done when debating solutions to the state’s fiscal crisis.
Maybe what we all need to do is pay more attention to the field of behavioral economics that’s been pioneered by Richard H. Thaler. Last week he won the Nobel Prize in Economic Science for what the New York Times described as a career effort to show “how the behavior of real people affects economic activity.” They called it “humanizing economics,” which I’m taking the liberty to mean economists are aliens who don’t understand how our world really works.
Traditional economics is based on “amazingly smart” people who are “free of emotion, distraction or self-control problems,” Thaler wrote in a 2009 Times article. “Real people have trouble balancing their checkbooks.”
And, as he’s explained elsewhere, their financial decisions are so at odds with traditional theories that they appear to be irrational. So consistently irrational that it’s predictable.
It’s easy to assume people who don’t track their bank deposits and withdrawals are acting against their best interests, especially after they’ve been penalized by withdrawing too much money from an ATM machine. But should the small subset of humankind who consistently make prudent financial choices be defining irrationality and predictability? Is it right to judge everyone else as inferior? Or to think it’s just a matter of teaching them how to manage their money more wisely?
Maybe we should be wondering what it is we’re missing.
I learned to balance my checkbook the day I got my first bank statement. I was 16 years old and didn’t own a calculator. Very few people did in those days. I sat down with a pencil and ran the numbers. It was easy because mathematics was a language I’ve never had trouble understanding.
On the other hand, I never retained any of the foreign languages I studied. And I love good music but never had any talent for it myself. In fact, I’m so bad I often fail to recognize when a musician makes a mistake. I simply can’t distinguish the finer differences in chords, keys or notes, which happen to have a unique mathematical-like relationship of their own.
What I’m saying is that while some of us easily grasp math and the fields of study based upon it, others are more inclined to learn French, Spanish or Russian. There’s those fluent in music. Others see the world primarily through art or dance their way to success we math minded individuals could never imagine. The list goes on and on.
As Thaler has written, most economists understand that “most of the people they know are clueless about economic matters.” Maybe it’s because their genius can’t be troubled by the rigidity of anything purely mathematical.
But economists trudge onward as if they’ve been given a key to a magical universe. Behind that door are irrational ideas like the taxpayer pledge and selling the commons. Irrational because the people selling them are predictably unaware of the mass network of human intelligence.
