Economics in one easy lesson
Politicians despise economists. Without meaning to economists act as the proverbial bucket of cold water on the blazing ideas and fiery slogans of the office holder/seeker. And for their efforts the men and women who work in the field of economics have those labors deemed “the dark science.” Well! Let’s open the shades and shed some light on the so called mystery referred to as “economics.” Here we go…
Economics in one easy lesson.
Any relevant economic concept concerning most of us is expressed in the following: People respond rationally to their short term incentives. Ok, now a few definitions to further our understanding.
Rationally – By this we mean men and women generally behave in ways which benefit themselves. No big surprise there!
Short Term – This is not a definite period but differs individually according to available resources. For example, a woman with six months income saved up has a much different “short term” than a man living paycheck to paycheck.
Incentive – Essential to the idea of incentive is the absence of coercion. Incentive entails individual perceptions regarding the best available alternatives.
Put in another way economics is the study of how people choose the best available alternative. Now, isn’t that easy? In fact, right about now you’re saying to yourself “Duh! That’s just common sense.” And you are absolutely correct.
MAKE NO MISTAKE, government has NO money! The only available alternative is… your money.
The real problem lies with incentives faced by politicians. Consider the poor politico’s plight. He or she wants to be elected or re-elected which translates into finding (or creating) an “issue” important enough to get out the vote. What results is almost always an initiative, regulation or law requiring time to implement, talent to manage and money to operate. MAKE NO MISTAKE, Government has NO money! The only available alternative is…your money. So, to sum up the politician’s situation, he or she has an overwhelming incentive to spend your money. (Term limits are starting to sound pretty good at this point.)
Perhaps in a perfect world economics and politics would be separate. But we have to face the reality of this world and deal with it honestly. I am reminded of the Latin phrase caveat emptor meaning “let the buyer beware.” A more appropriate axiom might be caveat suffragator. Let the voter beware.
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