Trade-Offs

As the old saying goes, you can’t have your cake and eat it too.  The very nature of economics, or, the allocation of scarce resources, is one of trade-offs.  One can’t have their $10,000 savings account, and also have that car they want on Craig’s list. He must consider the trade-off and decide. Such is economics.

Everyone understands this in a general sense, but, apparently the reality of it often doesn’t penetrate to more abstract considerations of this truth. Take environmentalism for example.  It is an abstract idea to demand “clean” energy.  But then there is sticker shock when the demand is met. (this would explain why “clean” energy is usually a wealthy man’s focus. He can afford the trade-off with no disruption to his living standard) The question should be considered by the one demanding it “what are the trade-offs?”.  The bottom line is you can’t have your current standard of living and clean energy too.

There are a lot of other abstract ways that trade-offs come into play.  Take for another example bankruptcy laws.  When one files for bankruptcy the resources they will not be repaying don’t just disappear.  In this day and age it is assumed that it is the rich and powerful who end up loosing.  This simply is not true.  Everyone loses… including you.  It’s just that the increments are so small you don’t feel them, except over time.  Here is a great illustration of this.  Politicians and their media arms can showcase one side of the trade-offs, the winners, while ignoring the trade-offs that occurred.  These are the economic slight-of-hands that this blog hopes to clarify.

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Filed under Economics, Government, Harsh Reality, Politics, Worldview

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