To be perfectly honest, I wasn’t always this good at economics.
Time was, just the mere mention of variable costs and theories of money, and my eyes would glaze over for days at a time.
But now, thanks to President Bush, I no longer feel like an economic illiterate. His explanations of interest rates, the money supply and how the economy works are all so clear and simple that I’m amazed that I didn’t understand them before.
But I do now, and so I was fully prepared when my teen-age daughter asked for help with her latest school assignment. “I’ve got to do this paper on economics, Dad, and I’m confused.”
“Not to worry, my dear, I smiled, “taller people than you are in the dark about those things. Lucky for you, Old Dad is right
on top of the dynamic world of finance…a world where Greshamites talk only to Keynesians…where cost and supply curves cross in dazzling symmetry…were fixed coefficient production functions and nonconvexity…”
“Dad, my paper is due tomorrow!“
“Sorry about that, honey; fire away.”
“Tell me about supply and demand,” she said.
“Excellent first question. It’s always best to start with the fundamentals; makes it easier to understand the hard parts when you get to them. Supply and demand are really very simple, honey. There used to be a direct correlation between those two forces, but that was before OPEC. You know what OPEC is, don’t you?”
“Good. I think your teacher will be impressed when you give her the very latest definition: ‘When supply and prices go up simultaneously, it’s time to demand an explanation.”
“Dad, that really doesn’t sound…”
“Trust me, honey. This is real-world economics I’m giving you.”
She didn’t seem convinced, but pressed ahead anyway. “What about gross income,?” she asked.
“Another easy one,” I replied. “It comes right out of today’s language. From your own generation. Don’t you hear it? ‘gross income? It simply refers to the obscene salaries paid to rock stars, designated hitters, tv anchorpersons.”
“Dad, are you sure? I thought everybody had gross income.”
“That was long ago, sweetheart,” I patiently explained. “Now the rest of us have ordinary income. Only a few are in the gross category.”
She was beginning to look worried. “Here’s one about income taxes. What are “dependents?”
“They’re the people who count on you to support them. In our family, you’re my dependent. So is Mom, your two sisters, the telephone company…”
“Dad, how can the phone company…?”
“I know they don’t actually live with us, sweetheart, but there’s no question that we provide more than half their annual income. I’ve been claiming them as a dependent ever since we got you that cell phone. Given the size of our monthly bill, there’s not a court in the land that would deny my claim.”
“Dad, my teacher says that President Bush plans to balance the budget by cutting taxes and spending more money on defense. How does that work?”
It was obvious she’d moved on to the more difficult questions. “Now you’ve hit the key issue,” I said, “but I haven’t figured that one out yet.”
“Has the president?”
“He thinks he has. Why don’t you call the White House and ask him?”
“I did, Dad, but his secretary said it wasn’t important enough to wake him.”