Monday, August 17, 2015

Ignorance of Economics is Killing Us

The failure of our education system is manifest now to even the most obtuse observer or left-wing pundit. I truly believe that the single greatest failure--the one with the greatest consequences for society--has been the failure to properly teach economic principles.

When I say 'economic principles,' I don't mean how Wall Street works, or the bullshit voodoo (and it really is!) by which unemployment and GDP figures are rectally derived. I mean fundamental, basic tenets of economic thought. The idea that, in a free society--the type of society in which no man or woman is forced, either physically or by force of law, to provide goods or services to another--one must exchange things of value in order to get things of value from someone else voluntarily. To do otherwise--to compel someone to serve you involuntarily--is to make that person your slave. And their name, by God, is Toby!

The failure to understand or impart this is responsible for the legion of college graduates we now have waiting tables and defaulting on their student loans. These young hopefuls pursued--at great expense (again, trading value for value)--their degrees in philosophy, English, women's studies, medieval literature, and the like, with no understanding that very, very few employers would have need of people with experience in these disciplines, because these disciplines did not convey a skill set that would provide value to their enterprise. These youngsters didn't understand that if they didn't have something an employer needs, something that would contribute to the operation and success of her business, then she would not hire them. This is not because she is heartless, but because she is human. How often do you knowingly purchase something that you don't need, or that doesn't work for its intended purpose? And when you do so unknowingly--like say, a worthless college degree--aren't you upset?

In conjunction with this reality, there is the concomitant reality that the world runs on finite resources, and as such, everything--EVERYTHING--in life is a trade-off. There exists no such thing as a perfect solution, where all needs are met for all people all the time, and as a consequence, we must prioritize those things most important to us.

In economist geekspeak, this is known as "opportunity cost". When you have limited resources (and everyone has at least one resource that is unalterably limited--their time), making choice A means, by definition, giving up the option to make choices B through Z (through infinity, really) using those same resources. In other words, if I spend $20 on a haircut, then by definition, I do not have that $20 available now to go see a movie, buy a shirt, or get a lap dance in the champagne room.

The hapless students above not only went into sickening amounts of debt for a product (education) that did not serve their needs (to get a job), they also spent time that could have been spent more fruitfully by learning skills that would be more attractive to employers. That is time they will never, ever get back.

This conundrum is doubly harsh, because these students not only didn't have the cognitive tools to properly assess value and plan accordingly before, but they still do not possess said tools now. As a result they don't understand how to eventually reverse this setback (through hard work and the belated acquisition of skills), preferring instead to beseech politicians to ameliorate this disaster for them. The politicians, of course, will happily promise to do that in exchange for the votes of their new captive constituency.

I don't pretend to know the solution to the current dilemma. Retroactive education is problematic at best. I can only suggest a course going forward: teach the next generation about economics. Teach these principles early and often, with simple examples at first, progressing toward a more mature understanding later. Lay that groundwork, and give these children the cognitive tools to assess value within the framework of reality. Teach kids, in other words, to think like economists. We have failed to do this so far, and it has led to taking our first steps toward a tyranny born of ignorance. We can still reverse it, but we have to act now. Our future depends on it.