Thursday, March 10, 2011

The Problem With Democracy

While democracy is a lesser evil compared to dictatorship, it is nevertheless a flawed system because voters often don't understand the reality they are going to decide upon.

Case in point is the latest Bloomberg poll.

It says that a majority of Americans believe that the deficit can and should be reduced substantially without raising taxes (except for households earning more than $250,000) yet even greater majorities oppose cuts in most major programs.

The only spending they support reduction in is for foreign aid and the wars in Iraq and Afghanistan, yet ending these things would eliminate less than $200 billion of the $1.5 trillion deficit. And even with a static analysis (with a dynamic analysis where behavioral effects is considered revenue gains would be even smaller), repealing the Bush tax cuts for households earning more than $250,000 would only increase revenue by $70 billion per year.

The inescapable conclusion is that to reduce the deficit to sustainable levels, it will be necessary to raise taxes for the middle class and/or to cut popular programs like Social Security and Medicare. Yet the public say they oppose such moves while at the same time favoring a dramatic reduction in the deficit.

While Krugman is wrong most of the time, he once in a while gets it right, and he was quite correct in describing the position of the majority of Americans as wanting to "repeal the laws of arithmetic".