Trade Offs

8 Economics Lessons #8

Economics are not inherently liberal or conservative. Sure, there are differences of opinion among economists on the left and those on the right, but they still have far more in common. I think the average liberal might be surprised to find how often they agree with Milton Friedman. I'm certain that your average conservative would be shocked to find they agree with Paul Krugman more often than not. The question of the economics of the left and of the right is rarely about the essential economic truths. Instead the question is about what each side is willing to give up to support their policies. The left will give up some economic growth while the right will give up the health and happiness of many of the people.

Conservatives tend to believe that the market knows best. Always. End of the story. Period. If the market is down, the market should be down. As for those effected ... the market has decided that you will be down. You know, sorry. What do you want us to do about it? Eventually, the market will rebound and sweep everyone up in the success. For a conservative, the free market is about the freedom of economic growth and the effects of bear markets are simply to be endured. They are only willing to make small trade offs.

Consider this point though: Taxation retards growth. No question. There's a theoretical point where taxes would be so high that it would be harmful to the economy. Still, isn't it worth it to retard growth a bit and have roads that are safe? Isn't it a good thing that by taxing the rich at higher rates it helps us to pay for the world's best military? Isn't it great that for a few percentage points of every paycheck that we can lift seniors out of poverty?

Regulations may slow down the economy but they help keep our kids safe and healthy. They can prevent giant banking crises. They ensure that many of the professionals you work with are qualified to do their job. They help prevent government employees from abusing the system. They help prevent businesses from scamming people. Isn't that worth a slightly lower growth rate?

In Charles Wheelan's Naked Economics, he keeps pointing out that reasonable people disagree. Although his viewpoints clearly tend towards the right, he's desperate to point out both sides of the economic questions and not disparage either side. It had made for a well-balanced book that teaches the subject well without resorting to the demagoguery that is so common to these discussions. Still, I'm a partisan, writing for a partisan blog. I feel no need to be "fair". I have opinions and I believe in them. To say that mass suffering is okay so that a few make even more money when times are good is inhuman to me, and I don't respect the opinion.

The beliefs at both ends of the ideological spectrum can be stated rather clearly. Conservatives believe in making the market work. A liberal makes the market work for people. Which sounds better to you?

(Less a lesson that an opinion piece, but it's my blog so I'll do as I wish! :) )

Previous Entries in This Series (Globalization, Deficits and Surpluses, Fiscal Policy, Supply-Side Economics, Externalities, Regulation, Deflation)