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One of my favorite readers commented on a column I’d recently written about myths and theories as they pertain to economics in America. He argued we should be more attuned to what a theory is versus a myth. OK, as a scientist I agree with that idea.

A theory is an idea stemming from facts and circumstances. In order to prove or disprove the theory, one must conduct experiments or tests using the correct factors pertaining to the elements (variables) of the theory. You can’t test a theory about pitching to left-handed batters, for example, if you’re using croquet balls instead of baseballs.

To have a theory become law, all the results from all the tests must be the same to a very high degree of statistical confidence. The length and complexity of the tests are a function of the number and type of variables that must be a part of each experiment.  Changing some variables and conducting tests to those changes help prove or disprove a theory. If the variables are many, testing may take a very long time.

If some of the outcomes show promise in validating the theory, it is incumbent on the testing regime to drive toward statistical validation. If the outcomes tend to show invalidation, then perhaps the theory should be replaced by another that shows more positive results to the intent of that theory.

One economic theory that has been tried several times continues to confound testing and economists as to its validity. That would be Supply Side Economic Theory. This is the brainchild of Milton Friedman, who was awarded the Nobel Prize in Economics for introducing this theory to other less worthy souls.

Some of my conservative friends think that the Nobel Prize is often awarded prematurely to those in a popular cause or position. I agree. President Barack Obama was awarded the Nobel Peace Prize for not being President George W. Bush.  Similarly, Milton Friedman was awarded his Nobel for a theory that has yet to yield validating data. Both of these awards preceded anticipated results from the awards committee.

Prior to the Progressive Movement of the 1920s and 30s, our economic theories looked a lot like the scenario Friedman set up in his theory. There were totally unregulated businesses exploiting a very poor and ignorant working class that had no financial hope of escaping their lot. Child-labor laws did not exist, so families with children had to send their sons and daughters into unventilated factories and mines for a dollar a day in order to feed themselves. There were the big, financial and industrial moguls who hoarded capital and wealth because they could.

Sound familiar?

There were no anti-trust laws and price-fixing was normal to business. There was no health care of any type for anyone except the moguls or the super rich of the day.  There was no unemployment insurance. There were no retirement plans. There was no income tax. In fact, there were very few ways that our government could raise revenue to pay for its military or fund research and innovative projects.

These conditions, in other, less “sophisticated” countries without a Constitution defining democracy, resulted in armed and violent rebellion by the have-nots against the government.

They often overthrew the government and wrested economic control from the moguls.  I guess the largesse of the rich didn’t quite trickle down far or fast enough for the starving masses.

In the United States, we reformed our laws and amended our Constitution to avoid armed rebellion and revolution. The horrors of labor/management warfare and the growing influence of unions forced our government to change the laws and facilitate more equity between the wealthy and working classes.

These actions from the Progressive Era gave us the middle class, who became the consumer class that grew businesses big and small. It wasn’t supply-side economics that allowed this quiet revolution.

It was intelligent government that cared about all of its people, not just the rich, that avoided social catastrophe.

The main reason this was accomplished was because the living Constitution allowed our government to do it. Strict adherence to the letter of the Constitution is like a religious fundamentalist who cannot see the marvelous opportunities for flexibility and benefit by allowing intellect into the experiment.

 

Turner is a retired teacher and industrial engineer who lives near Marble Falls. He is an independent columnist, not a staff member, and his views do not necessarily reflect those of The Tribune or its parent company. "The Voter’s Guide to National Salvation" is a newly published e-book from Turner. You can find it at www.barnesandnoble.com/ebooks. He can be reached by e-mail at vtgolf@zeecon.com.