{"id":942,"date":"2022-03-26T07:39:54","date_gmt":"2022-03-26T11:39:54","guid":{"rendered":"http:\/\/commoncents.blogwyrm.com\/?p=942"},"modified":"2022-03-26T07:39:54","modified_gmt":"2022-03-26T11:39:54","slug":"rampant-economic-ignorance","status":"publish","type":"post","link":"https:\/\/commoncents.blogwyrm.com\/?p=942","title":{"rendered":"Rampant Economic Ignorance"},"content":{"rendered":"

Most everyone knows what the term \u2018illiteracy\u2019 means, even those who can\u2019t read and the shame of illiteracy is so great that people often go to great lengths to hide the fact that they can\u2019t read\u00a0 \u2013 a feat best pulled off by the functionally illiterate (consider the made-for-TV movie Bluffing It<\/a> starring Dennis Weaver).\u00a0 The city of Baltimore even went to great lengths in the late 1980s and into the 1990s to declare itself \u2018the city that reads\u2019 since alarmingly large number of the citizens were functionally illiterate<\/a>.<\/p>\n

A smaller class of people feel shame at being illogical.\u00a0 In certain quarters, a lack of self-reflection and internal consistency in how one argues is often excused by appealing to feelings.\u00a0 \u201cI\u2019m passionate about it\u201d or \u201cit doesn't feel right\u201d are common enough excuses used to exempt the arguer from the burden of rationality and accountability.<\/p>\n

By the time we get to innumeracy<\/a>, the shame has all but vanished, all pretense to having to excuse oneself for a lack of a vital societal skill has dropped away, and in its place is a particular pride in this particular brand of ignorance.\u00a0 The inability to deal with mathematics and, especially, large numbers is seen as a badge of honor.<\/p>\n

But the proverbial three monkeys of \u2018see\u2019, \u2018hear\u2019, and \u2018speak\u2019 no evil have nothing on the alarming mix of the above three styles of ignorance to form the alarming way in which modern citizens consumes matters economic.\u00a0 For the purposes of this article, I\u2019ll call this tripart, lethal cocktail of ignorance rampant economic ignorance (REI).<\/p>\n

Case in point, the widespread claims that the oil companies are price-gouging.<\/p>\n

To be clear, I am not definitively claiming that the oil companies are not price-gouging but I strongly doubt it for the simple reason that I can\u2019t then explain what they were doing when prices were low.\u00a0 What I am claiming, with dispositive evidence, is that the average person who holds that position is indulging in merry mix of innumeracy and illogical thinking with a dash of functional illiteracy thrown in to spice things up.\u00a0 In what follows, I\u2019ll go through some of the evidence offered (there is simply too much to be comprehensive) and point-out those items that caught my eye.<\/p>\n

Let\u2019s start with the \u00a0REI on display in Politifact\u2019s article entitled (as far as one can tell) Yes, oil companies are reporting record breaking profits. But it follows pandemic-fueled losses<\/a>.<\/em>\u00a0 In this article, author Andy Nguyen attempts to \u2018fact-check\u2019 a Facebook post that reads<\/p>\n

Gas prices are rising at their fastest pace ever, and have topped $4 for the first time since 2008. America gets 1% of its oil from Russia, while Exxon, Chevron, BP and Shell profits are at their highest level in over 7 years. - Dan Price, the CEO Gravity Payments<\/div>\n

 <\/p>\n

To start, Nguyen only mentions in passing that Dan Price was the CEO of a company \u201cthat made headlines in 2015 when it raised minimum salaries for employees to $70,000\u201d but doesn\u2019t discuss that Price is likely a less-than-honest authority on any aspect of the economy base on the many criticisms heap on this \u2018headline event\u2019 of 2015 (see The Gravity of a Minimum Wage<\/a><\/em> for a summary).<\/p>\n

Nguyen this proceeds to provide a serviceable but somewhat disjointed context in which to place the rise in gas prices.\u00a0 Somewhat annoyingly, he fails to provide the following graph<\/p>\n

\"\"<\/a><\/p>\n

the original of which can be found here<\/a>.\u00a0 While this graph is far from perfect, it does demonstrate that gas prices were rising significantly over calendar year 2021 (year-to-year increase from approximately $2.25\/gallon to $3.35\/gallon) at an average increase of about 9.2 cents\/gallon\/month compared with the 35.5 cents\/gallon\/month increase in 2022.\u00a0 The lack of analysis here speaks of innumeracy.<\/p>\n

Next Nguyen fact checks Prices assertion that the US only receives 1% of its oil from Russia and finds that assertion wanting in that the number is a factor of 3 lower than the truth.\u00a0 To this correction I say so what.\u00a0 Without proper context it is impossible to tell whether a 1% or 3% (whichever it may actually be) drop in quantity supplied is significant.\u00a0 What is needed is the elasticity of the crude oil market \u2013 a fact seemingly ignored.\u00a0 Chalk one up for illogical discourse.<\/p>\n

Finally, we get to an analysis record profits for the oil companies.\u00a0 However, there is no way to make an apples-to-apples comparison.\u00a0 Consider the constantly shifting ways in which the \u2018profitiability\u2019 of the big four oil companies of BP, Chevron, Exxon, and Shell are described:<\/p>\n