Sunday, September 18, 2011

World's Financial Woes Made Simple

by Richard Crews
I heard an economist from China speaking on TV recently. It was remarkable to hear her talk: she made simple sense in a few sentences of the overwhelmingly complex topics she addressed.

(I say "an economist from China" but, although in a position of high authority in China, she was surely the product of a leading American university graduate school, not only because she spoke American English fluently but also because the U.S. still has international hegemony in business and economics post-graduate education. Anyone who speaks on such matters with clarity and authority anywhere in the world probably has U.S.-graduate-school credentials.)

As she took on each topic, she stripped it to the core. When she spoke of the U.S.'s financial woes, for example, she said there were three parts: the large national debt, the annual budget deficits, and unemployment. As to Europe's difficulties, she identified two key factors: the sovereign debt crises, and the lack of confidence in the Eurozone's political stability. On China, she named the population problem presented by the rural poor and the need to expand consumerism of a middle class.

When I first heard her speak, I thought, "My gosh, what clarity! What analytic acumen--coupled with such a heroic willingness to be simple and direct." I wanted to hear her again--to use her simple and direct analyses to focus my understanding. But as I got to thinking about her presentation, I realized that she had left out, glossed over, or generalized a lot of important factors.

In discussing the U.S., for example, she did not mention--much less work into the puzzle--the paralyzing political gridlock and the parts that new IT, media revolutions, and large, unregulated political donations make to that. Nor did she mention our crumbling and archaic infrastructure, the burgeoning green awareness of our dirty energy and patchy environmental protections, nor our Rube-Goldberg tax structure, and our upper-class-versus-others income and wealth disparity.

The more I thought about it, the more I realized that the simplicity or her analysis was, in fact, a fault, not a virtue. It is the kind of simplistic thinking that the media--and politicians--put forth, and that distorts and biases public understanding of important issues.

It behooves us all, if we do not understand an issue or do not have time to address it fully, to allude to its complexities and take a humble "pass" on espousing vehement opinions about it.