Shouting shouldn’t sway big decisions on the economy

By James McCusker Herald columnist

On March 4, college students across the country skipped classes in order to protest the rising costs of higher education.

Coverage at the University of Washington included a photograph of shouting students holding signs they had prepared themselves. Prominent was a student holding a large sign that contained a glaring spelling error: “Who’s State?” It suggested that perhaps skipping classes wasn’t such a good idea, or at least was an idea that had been overused in the past.

Street demonstrations are mostly theater, of course, and obtain their connection to reality mostly in the minds of audiences — either at the event or through news media.

What makes most demonstrations theater is that the demonstrators and their audience choose the portion of reality they see as important and ignore the rest. When well done, this is precisely why we love theater and movies, of course, but the process doesn’t provide a reliable path to good economic policy.

Instead, the apportionment of reality leads to perspective problems and misplaced priorities. There is no doubt that Abraham Lincoln was tall, for example. But that reality was only a portion of what he was. Certainly we don’t celebrate or admire him for his height.

The 19th century English writer Samuel Taylor Coleridge believed that what made the suspension of disbelief work in literature was human interest, and he was probably right. That is why demonstrations and advocacy tend to focus on a single human-interest issue. It’s also why one good example embodied in a real individual — a single mother whose unemployment benefits have been cut — is worth a thousand statistical tables, charts, and graphs.

Even though human interest is very important, street demonstrations and program advocacy qualify as theater because of their selective reality — the curtain that allows the audience to see only a portion of what is going on.

The economic model underlying this process is the piñata theory of public spending. If you whack the budget hard enough, with demonstrations or other means, funds will rain down on you. Traditionally, piñata whacking is done while blindfolded and unable to see anyone or anything else around, and that is a key element in the process.

It sounds like a flawless plan, and it has worked very well for interest groups and some public-spirited individuals over the years. There is, however, a catch. The piñata model only works in times of solid economic growth, or, put a different way, when it is not visible and obvious that increasing one group’s budget increase will come at the expense of another group.

In the campus demonstrations, for example, as long as they stay focused on the runaway costs of tuition it all works and makes good sense and good theater. There is no doubt that higher education costs are out of control, and have been for years. Nor is there any doubt that state-based higher education has become a monument to misplaced priorities.

But if the curtain is pulled back and the state’s budget choices are revealed — which clinic will have to close, what policemen and third-grade teachers will have to be laid off, what ferry boat will be idled in order to give students a break — theater ends, the house lights come up, and the reality of responsibility reappears. Reality reminds us that just as daydreams are easier than diligence, demonstrations are easier than decisions.

Even students who skip class know that the earth is round, not flat. But for short distances it can be, for all practical purposes, quite level. In the same way, our economy as a whole is not what mathematicians call a “zero-sum game,” where one group’s gain can only come at the expense of another’s loss. Except that in the short run, it is. And this is especially true for the allocation of public resources in a recession.

Recessions are when the indifferent and flat-out-bad management decisions of the past add their weight to our burdens. There is no easy way out of this, and our Legislature must make some tough decisions … or become another California, where irresponsible management now sits atop the wreckage of what was once a golden state.

We can do better than that.

James McCusker is a Bothell economist, educator and consultant. He also writes a monthly column for the Snohomish County Business Journal.