There are two types of TV shows I cannot stand - people sitting around talking about politics and people sitting around talking about sports. They're full of people shouting at each other and making really, really stupid arguments. I can feel my IQ dropping whenever I watch even five minutes of one of these shows.
The exception? TVO's The Agenda. I love this show. Terrific choice of guests and Steve Paikin is the best interviewer in the business. Unlike practically every other show on politics, it raises the level of debate instead of lowers it.
Last night's show was no exception. Part I was an interview with Ontario NDP leader Andrea Horwath and Part II was a roundtable discussion of the Ontario NDP platform (the segments are available to watch at the links). The panel included a journalist, Adam Radwanski, who is one of my daily-must reads, and three pundits associated with three political parties - Janet Ecker (PC), John Duffy (Liberal) and Erin Weir (NDP), a friend of and frequent commenter on WCI. A great group - I learned a lot.
The show, however, showed me that us economists still have a long way to go when it comes to educating the general public on economic issues. There were four points I found particularly problematic.
The panel were discussing an NDP proposal requiring the Ontario government to buy Ontarian. The panel seemed to be of the opinion that the policy is problematic because of the potential for tit-for-tat behaviour from other jurisdictions. Fortunately, John Duffy saved the conversation right at the end when he stated (roughly) that we do not get rich by overpaying for goods. Until that moment, the panel missed why trade is good - it allows us to obtain goods and services at a lower cost.
2. The Most Efficient Way to Assist the Poor is to Give Them Money
This was in the context of the NDP proposal to halve the HST on gasoline. I was delighted when Paikin spent a fair bit of time on this policy issue both with Ms. Horwath and with the panel. Naturally Weir approved of the gas tax cut whereas Ecker and Duffy did not. However, both Ecker and Duffy conceded that low and middle income families do need assistance, and offered other policies to assist, such as lower electricity prices.
Unless I missed something, at no point did anyone suggest simply giving lower income families more money through, say, higher sales tax rebate cheques. It simply did not not occur to anyone. I suppose that is not surprising - none of the three parties are running on that platform, so they will not bring it up, and Radwanski is covering the campaign, so it would be unusual for him to start discussing policies no one is proposing. All the heavy lifting on this front will continue to be done by economists.
3. Decisions Are Made at the Margin
Once again, in the context of the gas tax. The panel discussed how using less gasoline is not an option for rural Ontarians, since they naturally don't have public transit. In other words, the price elasticity of demand for gasoline is zero, which is complete and utter nonsense.
Public transit is not the only substitute for driving. An obvious one is that when gas prices rise, people will simple substitute some trips for... nothing. That is, they will take fewer trips. They will travel less, they will go to the grocery store less (but purchase more during each trip), they will find ways to increase the number of errands run on one trip. When gasoline prices rise, people will reduce their gasoline consumption at the margin.
4. Replacing Research with Guesses
Professional economists get accused quite often of abstract theorizing instead of examining the data. A fair criticism in some instances, but when it comes to economic issues I believe non-economists are far more guilty of this.
Back to the price elasticity of demand for gasoline. There is no reason to assume it is zero (it isn't). There is no reason to go on about what alternatives there may or may not be. Economists know with a great deal of certainty what the price elasticity of demand for gasoline is. We've been studying the issue for several decades. There have been, by my count, over 300 studies on the issue. Here are the numbers. Why speculate when the answer is easily accessable and well known to specialists?
The Agenda brings in the smartest and most knowledgable guests in Ontario, so this "replacing research with guesses" is fairly rare on the show. It's all too common on your typical sports or politics show, which is why I find them unwatchable. Instead what you get is a raft of ridiculous theories, sample size bias and meaningless anecdotes.
Imagine a host talking to a panel of four pundits about someone about to roll a 6-sided die.
Host: What's your prediction for the big dice roll?
Judy: Well, Jim, I've knocked on thousands of doors in this province, and families everywhere are telling me the same thing. They like the number 1, so I expect it to do really well.
Bill: Remember, the big dice roll is taking place on a Sunday after church, so the smart money is on 3, the trinity. We all remember Easter Sunday 1985 when a three was rolled three consecutive times. History is on the side of 3.
Jim: Look at the data. An even number has come up on 9 of the last 13 rolls. You have to play the hot hand on this one and go for 2, 4, or 6.
Alice: I agree with Jim's data, but all that means is that odd numbers are due. Judy is right that 1 is the trendy pick, but I really like 5 as a dark-horse candidate.
[Off-screen a mathematician is sobbing].
Of course, economists still having work to do is not the end of the world for those who would like to be continued to be employed as economists.