Amer. Intelligence Test: An Old Question: Are You Better Off?; A New Question: How Do You Know?

Politicians usually like to tell you what you are supposed to think, but once in a while one of them will ask a question. A rather salient question was raised by Ronald Reagan during his 1980 Presidential campaign. It resonated with many voters because it made them ask how they were doing under the then current Administration. The core-concept of this question was considered a economic/financial assessment. The question was quite simple: “Are you better off then you were four years ago?” Now that is a good question, and surely a simple one. And so, I suspect that you would feel it relevant to ask during every election. Now there are a trick or two in the question. For each person it must have an easy answer. So, let’s see if your answer(s) are easy and that you know or don’t run afoul of any tricks. Just as Reagan’s question related primarily to an ‘economic’ perspective, this test is also focused toward an economic landscape.

Be advised you may not wish to know.

Question A:   Are you better off than you were four years ago?

(1). Yes

(2). No

Question B:   Do you have more, less or the same level of debt from 1 year ago?

(1). More debt

(2). Less debt

(3). Same debt

(4). No debt

Question C:   How do you know, you are Better off (or Worse off if it was your answer) today than 4 years ago?
If a choice item applies assign it to a B or W grouping, if the choice item doesn’t apply ignore.

(1). Your wages

(2). Your debt

(3). You now have a job

(4). Your Net Assets value

(5). Your Cost of Living

(6). Health Insurance

(7). Your taxes

(8). Your Retirement Income or Savings

Question D:   Is the country better off than it was four years ago?

(1). Yes

(2). No

Question E:    How do you know, the country is better off (or worse off if it was your answer)?
If a choice item applies assign it to a B or W grouping, if the choice item doesn’t apply ignore.

(1). Trade Deficit is at record highs

(2). Unemployment is at record lows

(3). Inflation rate is low

(4). Stock Market at all-time highs

(5). Interest rates are raising

(6). Middle-class’s percentage of Nation’s wealth is increasing

(7). Gross Domestic Product is at all-time high

(8). More people are covered by health insurance

Question F:    If the Stock Market increases is the economy improving?

(1). Yes

(2). No

Question G:   If employment is increasing is the economy improving?

(1). Yes

(2). No

Question H:   If GDP (Gross Domestic Product) is increasing is the economy improving?

(1). Yes

(2). No

Question I:      Is wealth concentration higher, lower or the same than 4 years ago.

(1). Higher

(2). Lower

(3). Same as 4 years ago

Question J:    Can you be better off if the nation’s wealth continues to concentrate more and more to fewer and fewer people?

(1). Yes

(2). No

Question K:   Are you better off than you were four years ago?

(1). Yes

(2). No

Question L:    Will you be better off than you are now in four years?

(1). Yes

(2). No

(3). I don’t know

Question M:   What ‘tricks’, if any, did you fall prey to?

(1). Politicians’ “Promises”

(2). High Stock Market is same as good Economy

(3). High Employment

(4). That ‘trends’ that show a better economy have changed

(5). That ‘reasons’ for increases in good factors have changed

(6). I don’t know

(7). All the Above

(8). None

ANSWERS:

Answer - A:  Obviously, the answer only applies to each individual if we are describing your economic state. If you are assessing something else than please refocus.

So, Yes or No are correct if you still think they are correct when you are done; otherwise something became relevant that you hadn’t considered. I apologize for that.

Rationale - A:      Even if the question and your answer are regarding you and your situation, there are still underlying factors and requirements upon which you have made your determination. This is relevant to more than you may guess.

Answer - B:  An individual answer, whichever is yours is correct.

Rationale - B:      You have the debt that you have as an individual.

If you think more debt is bad then your answer to Question A should be consistent with that. If you think more debt is good then your answer to Question A should be consistent with that.

If the question were about the nation then the answer is also too simple to ask. The nation has more debt than 1 year ago, and has had more debt each and every year since a minor drop in 1969. The interpretation of is that good or bad is not equivalent to the situation for individuals above.

Answer - C:  B: Those items you gained on are individual to you.
             W: Those items you lost on are individual to you.
Overall, you must decide if the sum of B items outweigh the sum of W items.

Rationale - C:      So, if you are better off then it sure beats being worse off. But the economy is not simply a measure of you. Yes, I know you are very important to you; but I think even you would agree that relative to everyone else you are literally just a sample data point. Unless what’s true for you is equally true for everyone else than you have to decide if your situation warrants a judgement for the state of the next question.

Answer - D:  Yes

Rationale - D:      Remember we are in an “Economic” mindset. If you are factoring in other dimensions, then you are wandering off the trail. Now just because you got the right answer doesn’t mean that you got it for the right reasons; and if you don’t think that’s important then I can’t help you.

Consider the answers to Questions: E through J

Answer - E:  B: 6, 7  ;  W: 1, 6

Rationale - E:      On the Better side: Item 7 -GDP is a highly used and accepted standard for measuring the state of the economy. So, an all-time high should indicate a good economy. Item 6 measures the degree that the bulk of the population is benefiting from economic conditions. Unfortunately, if you put Item 6 in your reason for the economy getting better then you would be in error. It has not increased it has decreased.

On the Worse side: Item 1 - Increasing Trade Deficit is a problematic condition. If it keeps increasing the Trade Deficit becomes a larger drain on the economy until it becomes unsustainable. But a Deficit now and again can have a reason that is good under the appropriate situations, but it can’t last forever.

Now all the other items may sound Better or Worse, but for each it just isn’t that simple.
Item 2: Unemployment if high is clearly bad; but low unemployment need not be because the economy is good. Besides employment, wages and income must be at a level that also indicates a robust economy. If everyone is employed earning only minimal wages, the economy is unlikely to be in good shape.
Item 3: There is a desired level of inflation, so if it’s too low that’s not necessarily good for the economy, and if it’s too high we know it’s not.
Item 4: We all like a high Stock Market, but that doesn’t actually mean that the economy is doing well. It means that everyone thinks it is doing well. Can you remember any Stock Market crash that didn’t occur when the market was high?
Item 5: Like inflation, there’s good increase in interest rates and there’s bad increase in interest rates.
Item 8: Health insurance may change by economic conditions, but it doesn’t only grow when the economy is good or decline when it is bad.

You may have put one or more of the above items into the B or W group based on you view that its current state justifies it. This intelligence test requires more justification.

Answer - F:  No

Rationale - F:      See explanation in Question E above for Item 4.
This is not saying that an increasing Stock Market may not reflect an improving Stock Market, only that it doesn’t have to be the case.

Also, consider that the value of the Stock Market could be doubled if people just refused to sell their shares for less than double the current values. This would not mean the economy has actually changed, and as soon as someone started to sell it would collapse, again without changing the actual economy.

Answer - G:  No.

Rationale - G:     See explanation in Question E above for Item 2.
More employment is generally better, but not the only requirement for the economy to be better.

Answer - H:  Yes

Rationale - H:      GDP increasing is an indication of the economy getting stronger. Since GDP is used as a measure of economic robustness, it is somewhat of a circular reference.

We should be cognizant of the possibility that GDP could increase yet the nation’s economy might be declining. There aren’t absolute hard and fast rules here that cannot conflict with reality.

Answer - I:  Higher

Rationale - I:        See Item 6 in Question E. The trend has been toward more and more wealth in the ownership of fewer and fewer citizens. This isn’t a sign of a stronger economy but of a more and more vulnerable one.

Answer - J:  No

Rationale - J:       As wealth and income concentrate the economy is either declining or is becoming more and more unstable and subject to catastrophic failure.

Answer - K:  If you changed your mind, well that is hopefully useful for you. If you think the nation is better off also than your answer should be Yes; if not, it should be No.

I would also advise that if the nation isn’t really doing better, you transitive improved situation could quickly and radically change.

Rationale - K:      The economy is the aggregate of the nation. You are just a data-point. Sorry.

Answer - L:  I don’t know.

Rationale - L:      You are guaranteed much more than ‘Death and Taxes’. You also have to factor in the status of the nation as a whole (see Rational K).

Answer - M:  There is no right answer, not even Item 8.

Rationale - M:     Let’s deal with Item 8 first. Do you believe the economy has gotten better because the trends have changed? Or, that the reasons for increases have changed?
Then you should be able to show that trends and reasons both changed and are consistent. You also have to reconcile answers that conflict. By the way, the test didn’t ‘trick’ you; it was self-imposed.

All others have been explained in previous Answers and Rationale.