In honor of Paul Ryan’s fantasy budget let’s take a look at actual changes in government spending in this edition of Graphs that Subvert Conventional Wisdom.
You might be wondering, “How can this be? I thought that socialist Obama is spending us into fiscal armageddon! Hasn’t the deficit skyrocketed?”
Sorry, those graphs cluttering your inbox from your right-wing uncle misled you. They fail to explain that the deficit is higher because the economy went into recession. GDP is smaller so spending when measured as a percentage of GDP appears like it’s jumped more than usual. The deficit is higher because of huge tax cuts by Obama, less revenue from a weak economy, a temporary stimulus and other measures to help people hurt by the recession. The 44th President hasn’t radically departed from those before him… turns out he’s actually been pretty modest.
From time to time I like to do a feature here called “Graphs that Subvert Conventional Wisdom.” It’s always worthwhile to challenge popular notions about the world that happen to be wrong. But it’s also worth reminding people that sometimes obviously true things are actually true.
A lot of right-wing commentators like to pretend that tax cuts actually increase revenue or that tax revenue can’t rise above some magical boundary despite evidence from the US and nations all over the world. Despite the evidence that tax cuts reduce revenue except in extreme circumstances, supply-siders like to pretend that controversy exists about the facts. It seems creationists, global warming deniers, and supply-siders all have something in common. Of course, it’s likely they’re a lot of the same people.
Thanks to the IGM poll of economic experts from a wide range of political attitudes, we can see that there is virtually no disagreement. Here are the results of a politically relevant question as Congress debates whether or not we should raise taxes on the wealthiest Americans: (I’ve added a helpful red circle for those extra dedicated to ignoring the obvious)
In this week’s Graphs that Subvert Conventional Wisdom we see why monetary policy shouldn’t be run by gold standard cranks that think it’s just obvious that the Fed’s loose monetary policy is debasing the dollar and causing commodity prices to spike. Only a gold standard can prevent that! Ahem.
David Andolfatto of the St. Louis Fed:
Imagine that you are 50 years old in September 1980. Imagine that a trusted friend of yours–oh, let’s say your doctor–convinces you to put all your savings into gold. The reason he offers is that the Fed is pursuing a policy of “relentless money expansion.” He warns you that the money supply is set to grow by 300% over the next 20 years. So you listen to him.
You buy gold at $673 per ounce. And then you wait. You wait until you turn 70. And then you go to withdraw your savings. You discover that the gold price in March 2001 is $263 per ounce. That’s a whopping rate of return of…wait for it… -60% over 20 years. That’s a minus sixty percent.
(graph via MacroMania)
In another installment of Graphs that Subvert Conventional Wisdom here’s a chart that surprised me and dispels a common fallacy about American vs other health markets.
Probably due to sheer repetition I always bought into the notion that one of the trade offs of expanding coverage usually had to be longer wait times due to doctors having to deal with more volume. Previously I assumed we’d just have to do our best to mitigate that inevitable downside – it doesn’t seem so inevitable after all.
Expanding health coverage continues to be a worthwhile goal and I remain convinced that a greater governmental role is necessary (a free market linked with guaranteed catastrophic coverage is a political impossibility). Wait-times was one of my bigger reservations about increased state involvement; I still worry about decreased competition arresting medical innovation. Is that another myth or is there more truth to that?
(via: Kevin Drum)