Tuesday, April 12, 2011

A Question Of Context

In his entry for Monday, April 11, Jerry Pournelle writes:
... the more corn we turn into alcohol to burn as fuel the higher its price will go. I do not see that this is well understood by the policy wonks in Washington.

I have to disagree, they understand very well indeed within their occupational context. Budgetary policy wonks in D.C. (who advise Congress) view the price of commodities like corn and wheat as components of national GDP. From that contextual perspective, the rise in corn price increases GDP, which works to reduce the inflationary influence of other more directly financial government policy (quantitative easing, or printing more money). From that viewpoint the price increases can be expressed as a desirable effect of Congress's budget efforts.

Behold the power that automatic COLA raises has on the nation's political decision-making process. Something the good Doctor is well aware of also.

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