I am not one of Dr. Phil’s biggest fans.   He’s kind of a big lumpy guy without a lot of personality.  I, on the other hand, am a walking, talking burning hunk of love and charm and charisma. Anyhow, that’s what the voices in my head tell me, and I am their biggest fan. But I will acknowledge this much about Dr. Phil: He is very smart, and he makes a lot of sense when he addresses personal and psychological issues. So while he will never likely be voted “America’s Sexiest Man,” he does exude a high level of wisdom and reasonableness in personal matters that are hard to deny. One of his common sense truisms is this: “You cannot change what you do not acknowledge.”

 

The beauty of this statement is that it stands as an immutable truth that challenges us to disprove or refute it. And if we can do neither, then we must accept it, at least as a tentative premise upon which we can and should rely as a good guide when we evaluate personal issues. 

 

I am going to suggest in this essay that Dr. Phil’s premise also applies to a broader set of social issues that involve all of us. In particular, it applies to matters of fact in economics.   And while it is possible for very informed economists to disagree on the best course of action to take in any particular economic quandry, the great majority tends to agree on the facts and the analyses surrounding most issues rather than disagree about them. And that is because facts are positive, (they tell us “what is”), while prescriptions are normative, or they show us only what someone values (what they believe “ought to be”).   Beliefs and opinions are normative; they are not substitutes for or logical inferences from facts.

 

Economics is, first and foremost, a science; it is not a collection of opinions from which we can pick and choose to find those that fit our personal tastes or agendas.   The academic community acknowledges economics as a science and so does the scientific community. As a social science it relies on the tools and methods of science for finding good answers to issues. But it also involves people and their behaviors and their interactions—all of which tend to change over time. It therefore makes far greater use of statistics for making approximations about future behaviors than is seen in astronomy, for example. By its nature it does not offer precisely predicable outcomes that are likely to stand as reliable indicators for centuries or even for years as is often the case in the physical sciences. Still, its scientific conclusions are far more reliable than are the opinions of any one individual or any group of individuals who rely on guess, hunch, surmise, or ideology.

 

And that leads me to the crude art of politics.  Perhaps chaos is a more descriptive term for politics. This much we know for certain:   Politics is not a science. In politics there are few facts. There are mostly opinions. Most politicians believe they already have the “truth” handed to them by their ideological leaders, so they are not interested in facts or science. Or they are selective and pick and choose just the facts that support their agenda.   Or they resort to making up their own facts.   This is the art of assertion, or something more commonly known as “lying through your teeth.” And so, armed with assertions and misguided opinions, they step boldly forward to vote on legislation on the pretext of solving a problem, but one that too often makes matters worse for me and for you, while benefitting themselves and their benefactors. 

 

As an economist I cannot be all things to all people.  But too many politicians want to intrude into my profession, and make a lot of false assertion about “what is,” and then project those assertions onto “what ought to be” via bad legislation that makes matters worse for most of us.  And now that I am retired, I have more time to allot to educating a few more people, especially those who persist in short-circuiting the thinking processes by jumping to false conclusions about economic issues. Still, there are politicians who will not change what they do not acknowledge. To all of them, here is Dr. Phil’s advice:

 

 

Now here are a few facts that politicians must acknowledge in order to have any chance of fixing your false perceptions of economic reality, or fixing this particular economic issue that you now confront: 

 

The Debt Crisis:

 

1.       We do not have a debt crisis. Our public debt is approximately $11.7 trillion.  It is not $16+ trillion. We pay approximately $223 billion in annual interest on our debt, a total that is well within our ability to pay, or 6 percent of our federal budget. Our debt-to-GDP ratio following WWII was much higher then than it is today. We did not take heroic measures to reduce it then; we don’t need to take heroic steps today. We simply grew the economy during that period that produced enough revenue to grow our way out of debt. By 1970 our debt was virtually gone.

2.       Our real GDP growth rate (after inflation) from 1945 to 1970 was 2.28 percent per year. Since 1970 when we accumulated virtually all our present debt, our real GDP growth rate has been 1.26 percent per year. That difference has compounded to about 53 percent in lost GDP today, or $8 trillion.   

3.       The factors that can boost GDP growth are the same ones that produced our present debt. We simply need to reverse their trends. The cause/effect relationships are demonstrable via regression analyses. They are: reduce defense spending, reduce our trade deficit, and restore the highest income tax bracket. Since 1980 these three factors produced more than 92 percent of our public debt. 

4.       Neither Social Security nor Medicare contributed one dime to our budget deficits or to our debt. Both are funded independently via payroll taxes.  

 

I will conclude with Dr. Phil’s Life Lesson #8. It is a reciprocal lesson that applies to those who need to change, and in how we can approach them in their hour of need.

 

 

Dr. Phil’s advice on the personal level perhaps doesn’t quite apply on the political level, or it is too diplomatic in style and tone. One of our less diplomatic Generals, George Patton, is reported to have uttered the same sentiment this way “Grab the bastards by the balls and kick ‘em in the ass!” Translation:   Vote them out of office.