Bringing some cheer to the dismal science

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When economist and self-confessed dumpster diver Ed Lotterman spotted the giant vise resting unceremoniously amid the trash at a local college, his “inner scavenger” switched into overdrive.

Within minutes Lotterman had rescued the 160-pound vise and, after spending a few bucks and several hours in his home workshop, he had restored it to working order.

Sure, Lotterman, a hands-on type who lives in St. Anthony Park, was pleased to refurbish what he describes as a “sterling example of the American forge master’s art.” But what really fascinated him was the chance to draw some economic connections between the huge hunk of metal and a society that would rather throw it away than spend a little time and money to repair it.

Lotterman decided that dumping the vise was actually a rational economic decision for an American college bureaucrat with a budget that easily covered replacement costs but required specialized knowledge to requisition repairs. A Nigerian mechanic or a Peruvian craftsman, on the other hand, might make a different — and equally rational — decision to repair it.

To toss or to repair is not just an idle choice, he realized, but an economic event with consequences for a nation’s gross domestic product, its definition of profitability, and its comparative costs of goods and services.

By this time, the weight of economic speculation probably equaled the heft of the vise itself, but Lotterman was undaunted. As the author of a twice-weekly Pioneer Press column called “Real World Economics,” Lotterman has a unique talent for translating arcane economic concepts into the language of ordinary choices made by regular people.

“Many people write about macro issues like Wall Street or what stocks are hot,” he says. “But no one else applies economics to everyday life like I do.”

Lotterman, an adjunct professor of economics at Augsburg College and a former regional economist with the Federal Reserve Bank, says he was 48 years old before he realized that to “write a column was what I wanted to do in life.”

With a disarming confession that his attention span is too short for good academic research, Lotterman says he set himself a different goal: “I want to help people see how economic behavior is manifest in daily life.”

From the economic effects of the impending retirement of the Baby Boom generation (not as severe as you may have thought) to the best way to reduce fossil fuel consumption (you spell it
T-A-X), Lotterman has taken a common-sense approach to the dismal science in the over 800 columns he’s written since 1999.

This fall he hopes to bring his work to a new audience with a series of lectures on high-profile economic issues. The talks will be held at the History Theatre in downtown St. Paul, and Lotterman plans to invite the audience to join in a free-wheeling discussion.

Like the Chautauqua speakers of a century ago, Lotterman is hoping to entertain his audiences as well as educate them. The prospective title of one of his talks sets the tone for the series: “Weak dollar? Strong dollar? Trade deficit? Who cares? Who should?”

It’s a breezy approach to a serious subject, but Lotterman is banking that his casually knowledgeable style will be just the thing to help listeners unravel the mysteries of such worthy, but not noticeably sexy, topics as the national debt, the U.S. trade deficit and the future of Social Security and the Baby Boomers.

In an ever-more polarized marketplace of ideas, where screaming radio talk show hosts compete to produce virtually content-free sound bites, Lotterman presents himself as a deliberately old-fashioned fellow. He believes in old-time rational discourse and he finds merit in both left and right.

Maybe that’s because of his upbringing in a farming community in southwest Minnesota, where he was born in 1950.

“My mother was a Depression-era Democrat in a very Republican community,” he says. “I grew up very much a Democrat, but I knew lots of Republicans and I respected the sincerity of their views.”

As a writer on economic issues, he thinks of himself as a rare centrist among a field of partisan political advocates.

“It seemed there was a space for somebody in the middle,” he says, “trying to bridge the gap between left and right — someone evenhanded, who’s willing to point out errors on both sides.”

Lotterman’s own journey to the ideological center began in a fairly exotic setting. When he was barely out of his teens, he enlisted in the military. The Army sent him to Brazil in the late 1960s as part of an aid mission. There he saw for the first time the stark shortcomings of government policies that pursued social justice at the expense of economic efficiency.

Lotterman wasn’t transformed overnight into a free-market purist, but he did develop a healthy wariness of some of the more exuberant expressions of doctrinaire liberalism.

“Brazil is not poor because of lack of resources,” he says. “They made terrible mistakes because of state-centered, government-owned enterprises. It’s better to have economic growth than redistribution. People don’t get better off without growth.”

If there is one economic lesson that Lotterman hopes will stick with his readers and listeners, it’s this: “There is always a trade-off economically.”

Take the call for banning prepayment penalties on mortgages, which some activists regard as a measure of simple social justice. Lotterman responds, “You can ban prepayment penalties but it’s going to make the cost of other mortgages a little higher. In a competitive market economy, there’s no way that banning prepayment penalties is going to make less money for the lenders.”

Lotterman takes most economic dogma with a generous grain of salt, but there’s one way in which he remains a true believer.

“We live in a democracy,” he says, “a very bad system but one that’s better than all the alternatives. People ought to try to change society for the better.”

That’s what he’s attempting, one 800-word column at a time.

The Real World Economics Lecture Series will take place September 10, October 15 and November 5, at 7:30 p.m., at St. Paul’s History Theatre, located in the former Science Museum. For more information, call 292-4323 or visit www.edlotterman.com.