In Defense of Economics
George W. Bush, our shadow president, has dropped another bombshell, announcing that the Republicans in Congress concentrate too much on economics to the exclusion of social issues like education. There's more to life than the economy, he said, and if we elect him, he will help us see this truth.
His comments are the latest in a long stream of similar comments from the American political class. Next to proclaiming their love of the poor and the working man, bashing economics is their favorite sport. Of course it is always easier to attack, rather than learn about, a subject of which you are ignorant. But let's be clear: bashing economics is a luxury afforded only to political leaders in a wealthy society, particularly one experiencing an economic boom.
During recessions, for example, when people are losing jobs and incomes are declining, or when inflation picks up and the dollar is losing value, or when the stock market crashes and wipes out a few easy-living years from folks' retirement plans, the focus necessarily turns to economics. In such times, people begin to understand that economics isn't just about the federal budget; in fact, economics affects the very pith of life.
Whether in good times or bad, economics is an inescapable facet of temporal existence. It determines how we organize our day, whether we must work longer hours or spend time with our families, whether we can put down roots somewhere or must change jobs from region to region, how much we donate to charity, and whether our kids can go to college. Economic considerations are central to every decision we make.
The type of economic system we choose to have also has huge repercussions. It determines whether or not we can get the medical treatment we need when we need it, whether we can feel secure in our private savings, whether we can afford to live in spacious homes, and whether we have access to books and learning. Yes (are you listening George?), it is at the heart of how we go about acquiring an education. But it concerns much more.
Is our society composed of people who are struggling to get enough to eat, as everyone but the elite do in socialist societies, or are we permitted to cultivate arts, literature, and music? Can those with capital invest with the confidence that contracts they make will be honored or the profits that they earn will accrue to the owners of the company? If we have a good idea, will the legal structure permit us to try it out in the marketplace, or do regulations stifle innovation?
People take institutions like central heating, air conditioning, automobiles, indoor plumbing, refrigeration, and, now, the Web for granted. We eat crunchy salads year round and think nothing of it. We meander around the Wal-Mart with its millions of items from all over the world at our fingertips. We expect our children to live past the age of one, and ourselves to die long after the age of 40.
We don't ask why we enjoy such luxuries, which have existed in only a speck of time out of the whole sweep of human history. Students in college spend virtually no time discovering why they can have cell phones and stereos, whereas most people in most all of human history have lived in miserable, grinding poverty, where just a new garment was a lifetime event.
The great unspoken truth of our times is that none of the comforts we enjoy today would exist were it not for the economics of capitalism. Yet we spend precious little time thinking about how much this system has benefited us, and why we must protect it.
All of these are economic issues, and the only way we can understand the relationship between economic prosperity and economic systems is by studying economic science. A main principle of this science is that reality imposes constraints on what the state can do. Politicians may proclaim that they want to raise wages, but if they choose the wrong path (minimum wages, subsidies, inflationary monetary policies, trade barriers, etc.) the opposite will result.
We learn from economic science that there are strict laws of cause and effect in human society. These laws are not invented by the state and they cannot be repealed by the state. They exist independently of the state. This is why the main business of economists is to remind politicians of the limits of their power. Hence, it is not at all surprising that the politicians want to change the subject away from economics. The subject only reminds them that they are not all-powerful (think back to Clinton cursing the bond market).
The history of leftist ideology has been a history of the flight from economic science. Marx dismissed it on grounds that it was a bourgeois invention. Whole societies have attempted to abolish the teachings of economics, with the consequence of mass starvation. In our own time, environmentalists tell us that prosperity is evil because it hurts the earth; proponents of identity politics claim capitalism is nothing but a white male conspiracy; moralists pretending to love the third-world poor demand disinvestment from countries crying out for capital. These are very fashionable positions, deeply rooted in ignorance and dangerous to society's well-being.
Today we have the habit of dividing up political issues into four categories: social, cultural, foreign, and economic, as if each exists in a sealed compartment. Only small-minded, petty political figures are said to concentrate on economics, to "worship at the altar of the market." The truth is that society, culture, and foreign policy are all economic issues because they all concern the fundamental question of how society's resources are to be organized. The policies we adopt in each area directly affect the economic choices we make and the incentives we face.
Can we really afford to dismiss economics? Of course not. It is only thanks to the hard work of capitalists, who make the investments and create the new technologies that spur economic growth, that politicians feel free to sneer at economic science and have a grand time denouncing corporate kingpins for their supposed greed and materialism. Even the pricey suits on the backs of the statist ideologues are products of capital investment, however much these characters wish to destroy the system that feeds them.
The truth is that everything politicians say concerns economic science because everything they say concerns the organization of the scarce resources of the material world. Only a fool ignores this truth. And only a foolish politician would rail against those who have gone to some effort to understand what economic science has contributed to our understanding of civilization itself.
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