12/19/2006

Econ Majors

The Tribune Editorial Board demonstrated this morning why lawmakers should not get their economics advice from the newspapers. Discussing the '03 state income tax cuts and their possible relationship as a cause of our present budget surplus, the Editorial Board first said:

The [tax cuts] took effect last year, and there is no doubt that Montana's economy — including income levels — is perking up.

To what degree the up-tick is the result of the tax cut is not knowable, but previous analysts have said the primary factor in the state's budget surplus derives from natural resource development, especially gas and oil. [Emphasis mine]

The Editorial Board goes on to say, though, that we should not "be deceived by those who tell you more tax cuts would lead to even more state prosperity."

Wait a minute! You just said it is "not knowable" whether tax cuts have helped improve the economy. If it is "not knowable," that means no one knows that the tax cuts did not improve the economy or, more importantly for this point, whether they did improve the economy.

If their first statement is true, then, the second is nonsense. If we cannot know whether the tax cuts helped, that means that they might have. Why then would we be "deceived" by those who say that more tax cuts would help more?

It's either sloppy writing, sloppy thinking, or both. Or maybe, just maybe, they have no idea what they are talking about and are simply trying to frame an argument around their politically inspired conclusion?

3 comments:

Wulfgar said...

I'm confused as to why you think that the logic of the EB is incorrect. It's actually quite valid.

A claim is made that if x then y. Yet the truth value of that claim is unknowable. Therefore the continued claim of "if x then y" is a deceit, a claim to know the unknowable. No problems that I can see with that.

GeeGuy said...

No, I dont' think that's quite right. You don't know if it the claim is a deceit. It could be true. Just as its opposite could be true.

I understand your point and it is valid. I think we might be disagreeing about semantics.

free thought said...

If I follow this, according to the Trib:

1. There were tax cuts;
2. A better economy followed; and,
3. The tax cuts led to at least some of the improvement, but the exact degree cannot be determined.

They imply then that tax cuts are a benefit to the economy. Logically, then, more tax cuts would spur more improvement. But the Trib says that the logic it set forth is a deception if it is applied to further tax cuts.

GeeGuy is right. That is faulty reasoning. Had they said that, because we do not know the degree of improvement due to the prior cuts, we will not be able to estimate the value of future cuts, then their reasoning would be sound. Econ is not a precise science. It is based on trends.

The problem is the leap from saying that because we cannot predict exact results, we cannot predict trends. That is false. Which is why it is important to consider the basis for the Trib's conclusions. I think that it simply has a liberal bias against tax cuts.

They do not want to acknowledge that it would be reasonable to expect that lower taxes would be a good thing. Despite the evidence shown by the tax cuts under Presidents Kennedy, Reagan, and GW Bush.