One of the first things that they teach you in Economics 101 is that “Economics (according to the classical definition) is the study of the allocation of scarce resources which have alternative uses.”
In short, “there is no such thing as a free lunch.” We cannot have our cake and eat it to.
Professors of Economics continually drill into their students two important principles: (1.) The notion that there are “Opportunity Costs” associated with everything that we do, and (2.) Secondly, that is important to remember the concept of “Trade-Offs.”
Simply put an “opportunity costs” represents the price that one pays when they decide to purchase an item or a material good. When you make a particular acquisition of a good or a service, you then forgo the next best potential alternative.
For example, if you decide to buy a luxury car, you no longer have that money at your disposal to buy clothing or something else; with the particular purchase of that car, you have forgone the possibility of spending that money in other ways. Furthermore, instead of buying that luxury car, you could have chosen to go shopping with your wife or significant other (shopping is an activity that pleases this writer’s wife to no end…). With the money that you spent on that luxury car, you could have chosen to spend it in other ways such as seeing many, many movies or plays. But, because the study of economics revolves primarily around the question of resource scarcity, you quickly learn that you must wisely choose how you will allocate your limited resources (in this case money).
What always has puzzled this writer is that our national representatives seem to be so clueless when it comes to “basic economic principles.”
Why does it always seem that neither the Republicans nor the Democrats that serve in both Houses of Congress never seem to understand the basic concept of “opportunity costs?”
Every two years or every four years during mid-term and Presidential elections, we listen to the various aspirants for political office tell us how they increase social services, finance costly military expenditures, and reduce federal outlays – all without either raising taxes or strangling businesses with new and costly governmental regulations. This brings us to the concept of “trade-offs.”
Families make “trade-offs” all the time. Because time, treasure, and talents are scarce you have to make hard choices with regards to what you may acquire (or cut back on) at a given time. Families may have to choose between going away on a nice vacation and sending one of their children to music camp.
Why is it that Washington does not understand the principles of “opportunity costs” or “trade-offs” when they are busy passing sweeping new regulations that inhibit economic activity?
Politicians make it seem that all that the Federal Government has to do is tax and spend and that every social problem or ill will automatically vanish.
The saddest thing about this whole political posturing and campaigning that takes place every two to four years is that we foolishly their promises every election cycle!
Shame on us!!!
Did not Benjamin Franklin warn us after the Constitutional Convention of 1787 when asked what type of government that they had given the new country with this reply – “We have given you a republican form of government if you can keep it.”
Did not John Adams state that there was never a democracy in history that did not commit suicide?
Are we not committing suicide with this huge albatross around our necks known as the national debt? At the time of this writing, our national debt is quickly approaching 17 Trillion Dollars! Why is it that despite the party that occupies the White House or the party that controls both houses of Congress that our national debt continues to rise unabated?
Perhaps our problem is with the very nature of running for political office itself.
Politicians do what they know they must do in order to get elected. It is estimated that only 3% of the American population will ever run for political office even once during their lifetime. It takes the average person running for political office on average two to six election losses before they experience their first political victory. What then happens by default is that we reward people for their political perseverance and not necessarily for possessing keen economics acumen.
If our children are going to experience anything near like the Spiritual, Social, Political and Economic prosperity that we as people have enjoyed for more than two centuries, then we MUST quickly get a grip and work to get our financial house in order.
WE MUST DEMAND from our would be politicians (dare we say future statesmen and stateswomen?) that they seriously articulate plans to reduce our gargantuan 16 to 17 Trillion Dollar Debt before they every receive our vote. In this way – and while there is still time – just maybe FISCAL SANITY CAN BE RESTORED TO OUR REPUBLIC.