Monday, July 2, 2012

Lies my politicians tell me...

Myths are an interesting thing.  They play off the "familiarity bias" in psychology.  Hear something repeated often enough and you tend to accept it without thinking very critically about it.  Some myths occur deliberately through advertising and other directed media.  Some occur spontaneously through "meemes".

Modern politicians and lobbyists have tuned this to a fine art and do their best to exploit all of the myth-makign opportunities at their disposal.  The thing is, myths are most often false or incomplete.  They survive because people hear them and repeat them without ever really questioning them.

Even the most skeptical of us can fall prey to the power of the myth.  All it takes is a moment's sloppiness in thinking and it is through our barriers and into our mental body of 'facts'.

I'd like to take a moment in this campaign season to stop and explore two prevalent myths today.  I ask you to consider them under the light of real critical reasoning.

Myth 1: Insurance companies exist to pay your medical bills

This is total nonsense.  Insurance companies are companies.  The exist to make profits for their owners.  The greater the profits, the better the business.  Paying your bills reduces those profits.  

The fact of the matter is that the entire system of medical reimbursement exists to give the insurance companies as many reasons as possible to not pay your bills and still remain in business.

This is a myth that i have been aware is false for some time.  When we met,  wife worked in the insurance industry and I have had a direct exposure to what it does and why.

Myth 2: Business create jobs

This is one honestly caught me off guard.  It seems reasonable, right?  Business employee people, so they must create jobs.  So give them more money and they will hire more people.

But its also nonsense, or at least incomplete.  Business, as we said above, are in business to make money.  Hiring someone costs money.  The only time  business hires anyone is when they can make more money from that person's work then they cost to hire.  So when is that true?

It is true when there is more demand for a product then they can satisfy with their current work-force.  It is demand that creates the job, and demand is created not by concentrating money in the hands of business but by getting it into the hands of consumers.

Furthermore, a business will not hire more people just because they make more money on each employee (ie through paying less taxes or other incentives.)  It doesn't matter if they make 20% profit on that person or 40% profit on that person. If they can make ANY profit on that person they will hire them.  if not, they won't.

A good rule of thumb is that any time you hear two people say the same thing with the same language, it probably means they are just repeating the words, not thinking deeply about their truth.

Which is to say, they are repeating a myth.


CyberQat said...

Interestingly enough, Forbes just posted an article by an economist at TCU making the same argument... only better then I could!

Rocky Wenz said...

Well said.

JLP said...

It's not a myth if it is true.

Businesses DO create jobs, which creates demand, which creates more jobs, and on an on...

Oh, and learn the difference between "then" and "than."