The Economic Way of Thinking Brings Clarity

Any competently taught course in principles of economics should give each student the thrilling sense that he or she is being fitted with an almost miraculous pair of eyeglasses. This special ocular device, however, is worn not on the nose but in the mind. And the fact that it is thus invisible to the eye is itself ironic, for this marvelous instrument enables those who are equipped with it to see features of reality that are invisible to the great majority of human beings.

My favorite name for this astonishing mental tool is “the economic way of thinking.” When worn properly, it reveals even to college freshmen phenomena largely unnoticed by the general public. Such phenomena include the increased unemployment of low-skilled workers caused by minimum-wage legislation, the fact that tariffs do not result in a net rise in the number of jobs in the home country, and that government-imposed safety requirements on consumer goods often make consumers less safe.

The economic way of thinking brings into sharp focus a world otherwise invisible!

Unfortunately, relatively few people understand the economic way of thinking. But failure to think like an economist isn’t evidence of stupidity. Nor is it an offense: Every one of us fails to understand what is understood by specialists in countless other fields. Such is the inevitable fate of the puny human mind. This puniness is an important reason for specialization, which enables each of us to benefit from the unique knowledge possessed by others.

And so while a good economist is always eager to help fit non-economists with economic-way-of-thinking spectacles, he or she is not baffled by non-economists’ blindness to phenomena that economists see clearly. Such blindness is commonplace. And although regrettable, it’s also explicable.

Inexplicably Blind

What is inexplicable is blindness to phenomena that ought to be seen clearly by any adult of sound mind regardless of that mind’s specialization. Even more regrettably, the world is filled with this sort of inexplicable blindness.

One example of inexplicable blindness is acceptance by Americans in their mid-50s and older of the claim that ordinary Americans in the early 21^st century suffer a standard of living no higher than was enjoyed by ordinary Americans in the 1970s and 1980s. If you, like me, are a middle-class American old enough to remember the era of Ford-Carter-Reagan, you should be awe-inspired when you contemplate the enormously improved living standards of today. Yet very many Americans of my age and older inexplicably are blind to this improvement.

Unlike 40 or so years ago, today nearly all ordinary Americans have personal cell phones. Most of these phones will stream music from a vast catalog directly into the owners’ ears, on command. These phones allow instant messaging, surfing the web, photography, banking transactions, summoning of ride-sharing services, and sending and receiving e-mail. Each such device has a clock the accuracy of which would have drawn the envy of Howard Hughes.

When used as an actual telephone, calls can be made across the continent without any of the pricey long-distance charges that made such calls in the ‘70s minor luxuries. And, if they wish, during conversations callers can see each other.

Consider also supermarkets. Compared to today’s emporia, those of just a few decades ago were like dingy stores run by Soviet commissars. Or consider cars. The lowest-priced new car today has standard features – safety and entertainment – that were either unavailable 40 years ago or affordable only by the superrich.

I could go on. Experience alone should be – but, alas, inexplicably isn’t – sufficient to prompt every middle-aged and older American to hoot with laughter at the incessantly asserted claim that ordinary Americans today are economically no better off than were their peers four decades ago.

This fact doesn’t mean that all is rosy. While today’s higher standard of living is real and significant, problems in certain sectors – most notably, health care, housing, and education – do somewhat mask the general improvement.

And so we encounter another phenomenon to which many people are inexplicably blind; namely, the reality that, because these three sectors are ones cursed by especially heavy government intervention, problems there are likely caused by such intervention. Inexplicably, however, many people point to higher costs in these three sectors as justification for more government intervention meant to protect Americans from higher costs!

Inexplicably Gullible

Equally inexplicable is the widespread trust that people put in politicians. How, for example, can anyone who watched senators questioning Supreme Court nominee Amy Coney Barrett come away with an impression other than that these elected officials – Democrats and Republicans alike – are either stupendously stupid or monstrously Machiavellian?

Or consider this report by Peggy Noonan on a recent exchange between the Speaker of the House, Nancy Pelosi, and CNN anchor Wolf Blitzer; the subject was yet another proposed covid-19 “stimulus” bill:

He [Blitzer] said it’s not about him but people in food lines. Mrs. Pelosi: “And we represent them. And we represent them. And we represent them. And we represent them. We know them. We represent them and we know them. We know them. We represent them.” “Thank you for your sensitivity to our constituents’ needs.”

“I am sensitive to them because I see them on the street begging for food,” Mr. Blitzer said.

Mrs. Pelosi: “Have you fed them? We feed them.”

Nancy Pelosi presides over a chamber of politicians who vote on taxing and spending bills that transfer money from some Americans to other Americans – a fact that (inexplicably!) propels Ms. Pelosi to boast that she and her colleagues, not taxpayers such as Mr. Blitzer, feed poor Americans. On top of this appalling pretension, Ms. Pelosi expects CNN’s audience to believe that she and her Congressional colleagues “know” poor Americans in a way that non-politicians don’t.

As Peggy Noonan wrote about this interview, “It was bonkers.”

And yet most people continue to defer to people such as Pelosi … and to Trump, and Biden, and Cuomo, and Newsom, and to other such people, in Washington and in state capitals, who routinely parade in plain view their raw ambition, their delusions of possessing supernatural powers, and their lack of ordinary human decency. 

Inexplicably, though, countless Americans demand that such untrustworthy people be given even more power. These Americans remain blind to the reality that power, once created, is inevitably seized by such people. This blindness is not merely inexplicable, but also fatal.

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