A question I have about my economics textbook. Help me!

Economics Economics Questions
1

I am a second year student at the University of Western Ontario in Canada, and every time I read my textbooks for my economics courses I feel like the textbooks are extremely biased. Almost every chapter I read I end up highlighting major passages that seem biased. I do this so I can ask a professor later but I still haven’t gotten to it because I don’t want to sound like I’m threatening their school of thought.

First passage I’ve highlighted in the book (page FOUR!) on a page titled “What Do We Learn from Economic Analysis”:

“A tax cut is not a free lunch. When the government reduces taxes, this increases current incomes in the private sector, and it may seem that this implies that people are wealtheir and may want to spend more. However, analysis shows that in the long run GDP will be the same regardless of the tax cut…” It also goes on to say (to sum it up) that future incomes in the private sector must fall to make up for the larger government deficit (as if they couldn’t cut spending along with cutting taxes???)

This particular passage made me cringe. From my understanding, real GDP could be 1 trillion for example, and then the government could siphon all the money out of the private sector with guns and tanks and tell us all to produce 200 billion tshirts with a market value of 5 dollars each. Sure, real GDP is the same, but that has no bearing on our well being. GDP is not a direct measure of well being (from what I understand… it seems logical to say that).

I feel like when taxes are cut, more money in the hands of the private sector means more dollars for people to vote on where factors of production should be focused. If the tax is cut by 1% which increases private spending by 10 billion, those 10 billion dollars will go towards what people think is worth their money, signalling the market to expand in those areas where those dollars were cast.

I don’t want this post to be too long so I won’t list any more of these passages for now, but can someone tell me if I’m just crazy? I’m only 18 years old so I could just be an ignorant fool, but I get the feeling that I’m taking Keynesian Economics 215, although the course is called Economics 215. I feel like I’m being lied to and all my fellow classmates are being lied to. My roommate thinks economics is economics and there is no bias in the textbook, but I can point out dozens of biased (unless I’m insane) passages. I’m starting to worry about my program now [:S].

If everything I wrote is wrong, please tell me. My thoughts are eating me up every day and I can’t stop going over it all in my mind. In class I want to throw up my end and ask the teacher such questions but I don’t because I don’t want to sound like a smartass – or an idiot if I’m wrong. I’m hoping readers of Mises can help me out, tell me I’m not crazy :stuck_out_tongue:

2

GDP is a load of garbage in the first place, since it takes into account government spending.

Tax cuts only aren’t a “free lunch” to those who think that governments must supply us with everything. Talking about it in terms of GDP is just to obfuscate the real issue: whose money is it?

3

A “so what?” is meritted in response to this kind of stupidity.

-Jon

4

Not at all. Your analysis is spot on.

That’s exactly what’s happening.

It is not.

5

You are not crazy. The book states that “analysis shows that in the long run…” What analysis? Whose? Where is it? And if presented, it would most likely be some mathematical garbage cooked up by wannabe “scientists”. The passage you presented is completely biased. Congrats for recognizing it.

6

Thank you so much, I’m going to bring this to the attention of my professor. Thank you very much for the replies.

7

To what end? If your professor buys into this garbage, you’ll only harm your standing relative to them, and if they dissent, all they will tell you is that it is wrong, but as a matter of policy they have to teach what is on the course.

-Jon

8

I agree. I would just stay quiet, because you already know more than what the course teaches. Don’t make waves.

9

Haha. That’s hilarious. On the surface “GDP will be the same”, because the government that gets the tax money will spend it, and they count that in GDP! It’s a stupid measure anyway, but what is this “analysis” they claim to have done? Did they have two identical universes running in parallel, cut taxes in one but not the other, and see whether GDP is the same later? (and how did they access to the identical parallel universe to do their “analysis”, and how did they know it was really identical in every respect except for the tax cut?). Using a more sensible metric, obviously in the world with the tax cut the money will be spent on more-desired ends that whatever the government would spend it on, and therefore that world would be better off for it.

10

That’s pretty ridiculous. I’m sure I’ll be posting here once I get on in my textbook. Even the little things are starting to grate on me.

First chapter, they introduce Adam Smith, then Karl Marx, then finally Keynes the great compromiser.

And though they do mention “government failure,” I’ve yet to see them elaborate. They won’t even admit that minimum wage laws are bad, which I thought was mainstream by now. At the end they say that not many jobs are lost (10-100k), but that’s it.

It’s going to be a fun year.

11

Hmm, it would be interesting to generate a GDP - government expenditure. Is there already a figure like this to show whether or not the private or public spheres are driving velocity and growth?

12

Hmmm the trinity of Smith, Marx and Keynes might be from Heilbroner’s The Worldly Philosophers. Many good (or even great) economists are ignored by the mainstream.

LS, I have mentioned it before but it’s worth repeating, that Reisman and Skousen have alternative measurements of production in an economy. I’m not sure if they’ve actually made use of them yet, but both maintain that GDP is misleading as it omits productive expenditure, which is the growth engine of the economy. At best, most government expenditure (where it isn’t the outright production of bads) is mere consumption expenditure - consumption fulfilling the wants of the bureaucrats directing it.

-Jon

13

Thanks Jon. I was just curious if there was some sort of semi-known measure already for this. Something to make more use of when discussing econ with others.

14

Ask your friend why these use this book in a government funded university.

15

I actually believe that absorbing such propaganda and being able to refute in your own head is great education. You’re taking down two birds with one stone. I say, be grateful you can think and have resources like Mises.org

16

How about Rothbard’s “GPP” and “PPR” - http://mises.org/rothbard/agd/appendix.asp, http://mises.org/daily/2231