Academic Advising Economists Create Limited Sets and Quantify Irrelevance to Decision Makers

Not long ago, someone asked me what I’d do to turn around the US economy. Well my answer was quite simple; we need a red magic market committee. “What the hell are you talking about,” he said, “I asked you what you would do to fix the economy if you were in charge.” You see, I run a think tank which happens to operate online, and we talk a lot about economics. However, since he was an academic who advises political leaders on economic affairs, he’d never heard of such a thing.

Indeed, I explained to him that the red magic marker committee would be a group of business leaders both big and small that would go through the rules and regulations concerning business, carefully drawing through entire lines of regulations that made no sense, were too costly, and were just more bureaucratic red tape and/or duplication. He then understood what I was talking about, but he also told me that by having rules and regulations did provide more jobs for professionals; lawyers, consultants, tax advisers, etc. I told him that was nonsense and certainly no excuse for it, but he explained to me that he could show me using mathematics why he was correct.

As a former franchisor founder, having started my first business when I was 12 years old, I thought to myself; what planet is he living on? I don’t need mathematics to explain to me his concept, but he surely needs to get a life, get a job (in the private sector), and consider a stint running his own business for 10 years before he tells me I don’t know what I’m talking about because I’m just a small business person. Some things really look great on paper. Many business plans in fact.

Now that I am semiretired and running this think tank, I come across all sorts of great business plans, with great assumptions, beautiful spreadsheet and awesome proformas with a decent bit of math behind each little box. Of course the problem with writing these business plans is that most of the entrepreneurs take a limited set of facts, and expand upon those facts as if there were no other criteria. The world doesn’t work like that, and that’s why we should be very careful when academics start advising politicians on economic decision-making.

This particular academic advisor had never run a business in his life, and he couldn’t for the life of him figure out why we need to reduce the rules and regulations. It’s almost impossible to argue with someone like that, even using their own math, unless we can take them all the way back to the beginning of their assumptions and show them that they clearly don’t know what they’re talking about, and they’ve quantified irrelevance to the n’th degree. Their reality is not even in this dimension, so their math and data is neither scientific, nor worthy of contention. Please consider all this and think on it.