That is not an economist’s way of thinking, but it does seem to be how competing groups of ideologues and moralists increasingly view decision-making.
Consider policies advocated by many on the left or the right about issues they care about most deeply, and it soon becomes apparent that they are thinking not practically, but almost theologically — unable to tolerate compromise, unwilling to consider trade-offs.
Economics is all about the allocation of scarce resources. There are no gains without costs. Is one really prepared to let the world perish rather than allow the smallest injustice?
Moralists don’t perform cost-benefit analyses designed to reduce the most sin with the least effort. They don’t think of trade-offs among the Ten Commandments. Their worldview militates against such thinking, which for them carries a whiff of the devil’s sulfur.
With politics becoming a secular religion, and its practitioners taking similarly inflexible stands, affording little discernible benefit to the nation, it might be worthwhile to consider how an economist would approach some of the vital issues today.
In understanding people’s preferences, economists consider not what they say but what they do — their “revealed preferences.” Many today believe, with justification, that carbon use and climate change pose an imminent, existential threat to the planet. Yet if one reflexively opposes nuclear power or fracking and the natural gas it produces, all of which can reduce carbon emissions even if they are themselves not perfectly green, can one really believe in imminent global catastrophe, or is one thinking like a moralist who will not choose one sin over another?
The Green New Deal, endorsed by several Democratic presidential candidates, proposes to phase out internal-combustion engines and retrofit all buildings in the United States over a short time. But the deal’s proponents also call for guaranteed jobs along with suitable housing and healthy food for all, while ensuring that eminent domain is not abused. Surely, if the planet faces a climate emergency, one should postpone such causes, however desirable. Insisting on addressing all problems at once means that none is particularly urgent.
Scarcity exists, and imperfect choices must be made. Great literature, as well as great economics, has illustrated this truth. Anton Chekhov repeatedly criticized the self-indulgence of those failing to allocate time, money and energy effectively. For him, high-minded waste is never desirable. Fyodor Dostoevsky, in “The Brothers Karamazov,” portrays Ivan and Alyosha as high-mindedly agreeing that they would not save millions of children if it meant sacrificing even one of them. Is that really humane?
The fact is that we can identify approaches more likely to be effective in attaining good goals — and so are justified ethically as well as practically. In topic after topic, there is a surprisingly robust, data-backed consensus among economists to guide us.
For example, while the right has a proclivity for lowering tax rates and the left for raising them, economists understand general principles based on estimating trade-offs. A maximum marginal tax rate of, say, 20 percent, would be as misguided as, say, one of 80 percent.
Or consider the minimum wage. Just as eliminating it would hurt many workers, raising it too much would reduce employment opportunities for precisely those in greatest need of them. Today, most American economists favor a range between $12 and $15 an hour. Go far above or below these numbers and the harm will far outweigh the good.
How about trade policy? Neither protectionism, nor free trade without any provision for worker retraining or support, holds much sway with economists in most nations. A portion of the overall gains from free trade could be used to mitigate harm to those whom it hurts, and the country would still come out ahead.
As glaciers melt, wealth inequality rises and debt balloons, it’s time for a recommitment to prudence — and to pursuing workable policies instead of staking out impossible positions on the left or the right.
The great challenge for economists today is to find new and better ways to make their cases, with the goal of kindling a general appreciation of essential economic ideas such as incentives, trade-offs, marginal utility and revealed preferences. Learning to practice the dispassionate analysis of data would be helpful, too. Citizens making informed choices are good for the health of democracy, and lately American democracy has been ailing.