h2g2 The Hitchhiker's Guide to the Galaxy: Earth Edition

Economics is simply a science that many people claim to understand and some even profess to be actively involved in.
In reality it is impossible to understand economics because the "Washing Up Liquid"* law of economics clearly shows that the whole science does not respond to the normal laws of logic despite being a purely mathematical and numeric field.
Since mathematics is no more than the manipulation of numbers, it is impervious to ambiguity and as such is recognised across the universe as being a pure science. This is demonstrated by the fact that everyone eventually reduces all fields of science to mathematics in order to fully understand them. Economics however operates outside these laws (in much the same way that Bistro Mathematics does).
As such the closest anyone can come to understanding economics is in fact not very close at all, hence the fact that people like accountants and tax inspectors frequently disagree about the amount of tax owed by other people, the problem inevitably being resolved by a process of negotiation.
In effect what this means for the tax payer is that the more eloquently he can articulate his reasons for paying less tax, the less tax he is likely to have to pay. It is the clear necessity of this direct link between the pure science of mathematics and the creative craft of the wordsmith (an artisan whose primary product is fiction) that means that economics can never be properly understood
by either rational or irrational minds.


* The Washing Up Liquid law of economics pertains to the observation that the outcome of certain economic situations is invariably completely different to the theoretical outcome at which you would arrive by simply examining the mathematical facts of those situations.

By way of example let us examine the basic equations involved in the
manufacture, marketing and sales of a brand of washing up liquid.
As a single male I would use on average two bottles of washing up liquid a year. At roughly 80 pence per bottle I would be contributing £1.60 to the manufacturers. All clear so far.
The manufacturers, in order to sell me their product, would have to produce the product (including the cost of raw materials, production, administrative and management salaries, property costs etc.), pay for packaging and distribution, and cover the cost of advertising. The average TV commercial costs something in the order of £50,000 to produce and £30,000 for a prime time airing on national TV. Washing up liquid commercials probably run on average 5 times per day per
channel.
Obviously my contribution of £1.60 must now be multiplied by the number of people who use the product, but even if we say that the average family uses twice as much washing up liquid as I do, when we consider the deductions that have to be considered (i.e those families which use a dish washer, the fact there there are perhaps 10 other brands of the same product available not to mention the fact that most students don't use a dish washer or a brand of washing up liquid), we can see that the manufacturers can never possibly make
enough money to cover their costs.
Despite this, these companies consistently turn in record profits.

Consider now the figures involved with personal taxation.
All working adults pay income tax on their salaries at a basic rate of around 24%. Those on high salaries pay around 40% tax. Almost everyone pays tax on the interest that accumulates upon the savings they make from the salaries upon which they have already paid tax once. We pay Value Added Tax on every purchase we make at the rate of 17.5%. In the case of fuel, tobacco and alcohol these rates of taxation can run at around 80%. We pay Council Tax, Road Tax and Capital Gains Tax. Everyone who buys a house over a certain (relatively low) value pays 1% of that value as Stamp Duty, not too mention those contributions we make towards National Insurance.
On an average salary of £20,000 per annum, more than half is paid in tax to the state. Even those people whose salaries are paid BY the state, give 50% of it straight back.
Despite these huge contributions to the treasury, it is well known that all governments operate in a state of poverty, constantly borrowing vast sums from world banks and other governments in similar crises' to scrape together the services demanded by a modern civilised society.

In comparing the two contributions, the £1.60 to the fairy liquid manufacturer (upon which they would have to pay Corporation Tax) and £10,000 per working head of population to the state, it can be clearly seen that economics operates outside logic without the benefit of being a strictly random field of study.

Chris.