How Economic Models Make Us Poorer, Sen. Elizabeth Warren Edition
"If you’re wondering why the U.S. has failed so miserably in developing a workable child care and early-childhood education system, consider the role of economic modeling.

In 2021, when the Congressional Budget Office (CBO) released its much-anticipated score for the cost of the child care provisions in the Build Back Better Act, it produced one headline number: $381.5 billion. This was what CBO estimated as the amount of money the government would lay out for child care.But that budget score badly missed the mark on the net cost of the program. It did not account for any of the savings predicted by reams of academic research on the long-term economic benefits of child care.[...]In other words, according to CBO, investing in our children and filling a wheelbarrow with $381.5 billion in cash (a big wheelbarrow) and setting it on fire would have exactly the same impact on our national budget and our nation.

To every CEO of a Fortune 500 company or owner of a small neighborhood restaurant, budget scoring like this must sound like a crazy way of doing business. After all, investments don’t just have costs—they also have benefits."

#Economics #Politics #EconomicModels #Capitalism #EconomicFallacies #PublicEpenditures
https://prospect.org/economy/2023-04-04-policymakers-fight-losing-battle-models/