Refuting Quick-fix Memes: Scrappage and Swimming Pools

A meme is an idea that takes root and spreads from person to person. A quick-fix meme[1] is such an idea, usually a solution, that sounds good but doesn’t hold up under scrutiny. Often the meme preys on people’s basic ignorance of the subject matter and their desire to believe that their gut instinct won’t steer them wrong.

One example of such a meme is that countries should pay people to scrap their cars, commonly called “scrappage payment” plans. Germany has something like this in place and England is being strongly urged (by the purveyors of the meme) to adopt such a plan as well. Citing from the article Scrap It by George Monbiot:

“[Proponents] argue that drivers should be paid around £2000 a head to scrap their old cars and buy new ones. As well as saving the jobs of hundreds of thousands of workers, this, they say, will catalyse a low carbon transport revolution.”

All you really need to know about this idea is that it’s a thin veneer over a giveaway program for the auto manufacturers—“nothing but hand-outs for the car firms, resprayed green to fool the incautious buyer” according to Monbiot—that is one of the most expensive way to avoid CO2 yet invented. Monbiot calculates that it would cost “£2525 for every tonne of CO2 avoided” compared to “£3.50 a tonne by investing in geothermal energy, or £9 if we put our money into nuclear power plants”.

It’s bunk and easily refuted by someone with a little time to research and a calculator. Refer proponents to Monbiot’s link and tell them to come back when they can poke holes in his argument.

Another fine idea birthed from the minds of those not yet willing to accept that the trickle-up party is over is the “Swimming Pool” metaphor of the national economy. Read the post The Treasury View: Swimming pool version by John Quiggin (Crooked Timber) for the full story, but it basically boils down to comparing the redistribution of wealth to the bailing of water from one end of a swimming pool to another. Again, the meme appeals to those who like to think the world works like these kind of just-so stories and will likely inspire more than one look of triumph. However, it is even more easily refuted than the scrappage one as it isn’t even self-consistent: taken at face value, it also refutes the massive redistribution of wealth from poor to rich likely supported by its purveyors. There is so much wrong with this “metaphor”—in quotes because it doesn’t even deserve that moniker—that it’s like an avalanche of poisonous thinking.

The comments for the post are worth reading[2], but the best refutation is the post Pre-Elementary Monetary Economics Department by Brad DeLong (Grasping Reality). It takes us through a longer scenario with four actors, carefully showing (in plain English) how an economy actually works. The scenario involves a loan and subsequent reimbursement of $500, but posits a more complex path for the money to take than directly from and back to the bank. Instead, DeLong shows how the velocity of money can be increased in tangible, useful ways:

“The net result? (a) Alice who would otherwise have been idle has been employed–has traded her labor for meals. (b) Carol who would otherwise have been idle has been employed–has traded her labor for a secured lien on Beverly’s house. (c) Beverly has taken out a mortgage on her house and in exchange has gotten a deck built. (d) Carol has the $500 cash that Beverly owed her in the first place.”

It’s another succinct example that shows how the world can’t be fixed with quick-fix memes because it’s more complex than an uneducated lout can expect to understand with just his gut.