Thursday, February 09, 2012

Why the economy is improving

1. Here's a new concept for you all: regression towards the norm. It's something that can observed in almost anything that involves statistics. Unusually low numbers can be expected to go up, unusually high numbers can be expected to go down. You can expect that the 2-14 Indianapolis Colts will have a better season this fall even without Peyton Manning, and the Superbowl champion New York Giants might not do as hot. Everything goes through peaks and valleys, the economy is no different.

2. From time to time, a "new normal" arises and it takes time for businesses and individuals alike to adjust to the new normal. The economy can show growth under any POTUS.

Economics is nothing more than applied psychology. It's billions of human decisions on what to buy and sell. If these decisions were always made on a rational basis, forming economic models would be easy. So before you ask Congress or the President to fix the economy, remember that they're human too. Democracy works better than monarchy for the same reason capitalism works better than socialism: more people are involved in the decision making process.

2 comments:

Curt Wulf said...

You should stick to political rants and steer clear of actual political science and economic theory, because your ignorance shows.

Robert Enders said...

Pardon my ignorance, then. Perhaps this can be a teachable moment. Which part of the post shows my ignorance? It's easy to call someone stupid, but you could be kind enough to explain why I'm wrong.