Economic Nonsense

Everything we do is either directly or indirectly an economic activity, but we are, nevertheless, surprisingly ignorant of the principles, theories, and fashions of the world of economics.  This general ignorance has led to numerous mistakes in public policy with horrible social consequences.  The cardinal misconception is that economics is about money, but this really is not the case at all.  Money, in whatever form that it takes, is simply a device that simplifies (even lubricates) the marketplace.

Imagine an economy without money—or anything to take its place.  Imagine having to trade a bit of work with your skill in order to get a bit of work for a baker’s skill.  Suppose one day you needed to buy meal, paraffin, cloth, and goose.  Imagine having to go round to each shoppe and barter your skill for the produce of each of theirs.  And what if you needed some repair to your cottage but could find no craftsman who needed the produce of your skill at this time?  While economics is not principally about money, one can easily see the importance of money to any economy.  So great is its importance that even the most primitive economies use money in some form.  The lack of money would severely constrain any imaginable economy, so virtually every society has found some means of tokenizing units of economic value.  At heart, all economies are systems of barter.  Money merely simplifies the process.

But economics is not principally about money.  Economics pertains to the use of scarce resources that have alternative uses.  As it happens, we live in a world in which no resource exists in unlimited quantity, and every resource that does exist has a myriad of uses.  Milk, for example, can be used to make cheese, butter, ice cream or it can be consumed as milk.  Because milk does not exist in unlimited quantity—in other words, it is a scarce resource—its various uses must be prioritized.  Scarce resources must be rationed for their many alternative uses.  Economics is all about the various ways that different societies do just that.

The primary purpose of this blog is to examine economics in a world of finite resources.  Its name, A World of Trade-Offs, is taken from a quote by American economist, Thomas Sowell:  “There are no solutions, only trade-offs.”  The importance of this idea cannot be understated.  Economic problems are treated by politicians, activists, and the general public as if they are problems requiring solutions, but this is misguided.  There are no solutions to economic problems.  There are only trade-offs between various priorities of value.  Too often, however, “solutions” are advanced to address some problem—or in the name of “fairness” or “social justice”—that impose trade-offs that are worse than the original problem.

This blog will explore economics as a practical matter for citizens and consumers.  It will not approach the subject as a technical discipline but as an essential life study for everyday people.  The lack of understanding of practical economics makes people easily susceptible to ridiculous ideas and unsound public policy.  It is the lack of an education in practical economics that has made the world vulnerable to exploitation by charlatan politicians and despots.  I should like to take a stab at that ignorance and exploitation and, perhaps, help others become more enlightened in this sadly neglected field.