Normally, I wait until mid-December. This year, to celebrate the 30th anniversary of this weekly homily, I went early for my annual visit with Elvin Elfenhausen at the North Pole. As we downed rounds of Santa Sauce from our tankards in the Polar Pub, we talked about forecasting.

“We do lots of forecasting here at Santa’s Workshop,” Elvin told me.

“What do you need to forecast?” I asked. “The weather for the sleigh’s delivery route? Which houses have which children? They do move around, but is that necessary?”

“All that and more,” he told me. “In addition to knowing the weather and the location of each child, so we don’t deliver the same presents as the year before, we have to identify toy trends and the economic conditions of each household.”

“Wow!” I exclaimed. “That’s one bleep of forecasts.” Santa’s Sauce was getting to me.

“You bet it is,” he replied dolefully. “We have to surprise children and their parents, but never go outside their range of rational expectations. We have to understand what fits with that family’s aspirations. A fancy edition of novels by Dickens might be wrong for the child who has yet to read Dr. Suess stories or needs winter gloves.”

“I understand completely,” I said.

“It’s not like those economic forecasts done by outta-state consultanting hired nuns used by the Plate of Indiana,” Elvin said slurring his words.

“Yeah,” I agreed agreeably. “The revenue forecasts that use those economic forecasts very often come in too low.”

“Makes sense,” Elvin said. “A forecast that’s low is better for the politicians than one that’s high. Even if the pols are high.”

“Yeah,” I repeated. “A low forecast is always safer than a high one. It says things are better than expected. And the pols can take the credit for the wisdom of their policies which they’ll claim have made those things better than expected.”

“Couldn’t be said better,” Elvin nodded.

“Then there’s the Golden Gift,” I told him.

Now Elvin said, “Yeah.”

“Yeah,” I said with enthusiasm. “Call it a Budget Bonanza or a Sizzling Surplus. So we’re going to take a piece of it and give it back to the taxpayers in an election year, like 2022.”

“Smart move, taxpayers, who else is there?” Elvin pronounced.

“Except,” I said moving my index finder to my nose, “Indiana doesn’t have a surplus of money, it has a deficit of services. It needs to update its sewers, its water systems, its roads, its schools and other public buildings, and repair its natural environment.”

“No way. That would be forward looking and good for everybody. That’s why we’re getting Biden Bucks,” Elvin smiled.

“Right,” l said. “The Hoosier legislature thinks it’s supposed to make people happy, not make them better off. And our legislature always makes people laugh.”
Morton J. Marcus is an economist formerly with the Kelley School of Business at Indiana University. His column appears in Indiana newspapers, and his views can be followed his podcast.

© 2022 Morton J. Marcus

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