MARCUS: Don't learn economics from announcers

Morton Marcus
January 2, 2010
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Morton Marcus

Before you arrived, she stood up to put on her coat.

“I can’t stand you anymore,” she said. “You distort reality and transform it into a perverse fiction made of silly putty.”

“That’s Silly Putty,” I said. “Crayola owns the trademark and I don’t think fiction, as usually conceived, can be made of Silly Putty.”

“That’s so sick,” she exploded, “so typical of your usual wordplay to avoid facing the issues.”

“No,” I said firmly, “it is the kindest way I can respond to your misunderstanding of how our economy works. Let’s review what just happened.

“You said government taxes take money out of the economy and therefore away from businesses and households. That is either persistent ignorance at best or an irresponsible lie at worst.”

“You’re calling me a liar,” she said, piercing me with flaming eyes.

“If you thought about it,” I said, “you would see the error of that thinking, no matter how often it is repeated. If you pay a dollar in taxes, what do governments do with it?”

“That’s easy,” she said. “Governments spend every dollar they can get.”

“And how do they spend it?” I asked and proceeded to answer my own question. “They buy goods and services from the private sector, from businesses and households. And they also hire people directly to work for government, people who spend their wages in the private economy.”

“Yes,” she admitted, “but I’ve always heard that government spending is not as productive as private spending. Government, Paul Harvey used to say, doesn’t create wealth.”

“Exactly,” I snapped back, “you and millions learned economics from Paul Harvey and other radio-TV personalities. Government spending is just like business spending. Both hire labor and both buy supplies from the private sector. Some government spending goes for services with immediate benefits, like snow and garbage removal; other government spending is for long-term investments like education and sewers.”

“Well,” she said, “that makes some sense, but what about all that government spending on unnecessary things?”

“What is more unnecessary,” I said, “than most of the things we bought this past holiday season?”

“But that was our own money,” she protested. “We have every right to spend our own money as we want.”

“You have that right,” I agreed, “but that does not mean you made the right choices. Instead of that extra box of toys for your nieces and nephews, you could have donated the money to the public library for books that could be enjoyed by all the boys and girls of this town.”

“That’s socialism,” she shrieked.

“No,” I responded vigorously, “that is good citizenship as promoted by religious people worldwide. That is thinking and acting beyond your own circle of friends and family.”

“But the library is supported by taxes,” she said. “Why should I give them more money when they already have my money?”

“Because,” I said patiently, “you don’t support the library or most government services with adequate taxes for them to do the job we expect of them.”

“Well,” she pouted, “now we’re on ground I understand. Do you see how many people work in the library? Certainly they could do with fewer employees. They need to cut the fat.”

I waited a moment before saying, “You don’t know what those employees do. Take a few hours to visit any government office and find out what the workers do. Then talk to me about ‘fat’.

“And,” I probably should not have said, “let’s go to your place of work to see how many of your private-sector employees are loafing, useless leeches. Maybe a good analyst would define you as ‘expendable fat.’”

That’s when she left and you came in.•


Marcus taught economics for more than 30 years at Indiana University and is the former director of IU’s Business Research Center. His column appears weekly. He can be reached at mmarcus@ibj.com.


  • yes we need libraries
    To the question, do we even need libraries in the digital age, the answer is yes.
    Libraries are much more than places to read books, magazines, etc. They are cultural repositories that cannot be replicated online.
    One example: The music floor of the new Indianapolis Marion County Public Library has the complete scores for every instrument of dozens of operas, and also has original programs of the Chicago Symphony Orchestra dating far back into the 20th century.
    Another example: walking through the library stacks, one is exposed to so much more than one would find randomly searching the Internet or even with a directed search.
    So yes, we need libraries.
  • Economics from Announcers
    What Marcus fails to grasp is that at-least with private industry and my own money I not only have a choice I actually get to make the choice. In his world we appoint bureaucrats and academics to run our lives and make bad decisions for us. In the real world the question is, in the information age with internet access and e-readers at our disposal, do we even need libraries. I might read his column again someday but only out of morbid curiosity.

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  1. By Mr. Lee's own admission, he basically ran pro-bono ads on the billboard. Paying advertisers didn't want ads on a controversial, ugly billboard that turned off customers. At least one of Mr. Lee's free advertisers dropped out early because they found that Mr. Lee's advertising was having negative impact. So Mr. Lee is disingenous to say the city now owes him for lost revenue. Mr. Lee quickly realized his monstrosity had a dim future and is trying to get the city to bail him out. And that's why the billboard came down so quickly.

  2. Merchants Square is back. The small strip center to the south of 116th is 100% leased, McAlister’s is doing well in the outlot building. The former O’Charleys is leased but is going through permitting with the State and the town of Carmel. Mac Grill is closing all of their Indy locations (not just Merchants) and this will allow for a new restaurant concept to backfill both of their locations. As for the north side of 116th a new dinner movie theater and brewery is under construction to fill most of the vacancy left by Hobby Lobby and Old Navy.

  3. Yes it does have an ethics commission which enforce the law which prohibits 12 specific items. google it

  4. Thanks for reading and replying. If you want to see the differentiation for research, speaking and consulting, check out the spreadsheet I linked to at the bottom of the post; it is broken out exactly that way. I can only include so much detail in a blog post before it becomes something other than a blog post.

  5. 1. There is no allegation of corruption, Marty, to imply otherwise if false. 2. Is the "State Rule" a law? I suspect not. 3. Is Mr. Woodruff obligated via an employment agreement (contractual obligation) to not work with the engineering firm? 4. In many states a right to earn a living will trump non-competes and other contractual obligations, does Mr. Woodruff's personal right to earn a living trump any contractual obligations that might or might not be out there. 5. Lawyers in state government routinely go work for law firms they were formally working with in their regulatory actions. You can see a steady stream to firms like B&D from state government. It would be interesting for IBJ to do a review of current lawyers and find out how their past decisions affected the law firms clients. Since there is a buffer between regulated company and the regulator working for a law firm technically is not in violation of ethics but you have to wonder if decisions were made in favor of certain firms and quid pro quo jobs resulted. Start with the DOI in this review. Very interesting.