carey_jim

Would Defeat of Obama's Stimulus Plan Be a Good Thing?

You need to realize that economic solutions can't exist in a vacuum. You need to look at history, sociology, psychology and politics too.

For example, if you analyze the causes for the recent rise of wage inequality in the United States (just to cite an arbitrary example), from a purely economic point of view you get:

1. Fall in union membership
2. Rise in immigration
3. Rise in trade with low wage countries
4. Rise in technical requirements for good jobs
5. Rise in families without fathers
6. Increase in both husband and wife working
7. Decrease in the quality of schools
8. Decrease of the minimum wage
9. Increase in drug use
10. Fill in the next 10 causes yourself.

But all of the above causes have historical, social, psychological and political roots as well as economic ones.

For example, if you confined yourself to looking at economic models to describe the effects of a drop of union membership on wage inequality, then by ignoring psychology, sociology, history and politics you will anger a lot of people (psychology) and make them ignore your analysis (politics) as too one sided.