Economics and Scrambled Eggs

Much of what we hear today from politicians and parroted by the media is nothing more than nonsense. Their babblings at times would be considered comical except for the fact that tragic attacks on liberty soon follow. Unfortunately, most people fail to see the lack reasoning in what they read and hear. Having been educated in history and economics ripe with folly, a majority falsely believe in the virtues of government and the evil of capitalism.

 

Human action, or what we term as economics, is governed by natural law.  Our daily activities are guided by the first axiom of economics; we, as individuals, seek to satisfy wants and needs with a finite amount of resources. No different than the laws of gravity, this law of human behavior cannot be altered. Granted, government through regulation attempts to steer our actions in a prescribed path. But such alterations usually result in outcomes unforeseen by the bureaucratic establishment or the journalist whom many rely on for information. In today’s vernacular, regulation likely leads to unintended consequences that fail to deliver the benefits while giving rise to a problem that did not exist before.

 

The reason for this is simple. Economics does not take place in a vacuum where one action leads to another, then ceases to cause any additional acts. Human behavior consists of a series of actions and reactions that literally stretches into infinity. What we do now was influenced by what happened the moment before or years ago. This belies the logic of those who believe humans action and interchange can be molded to perfection.

 

Though I hold a graduate degree in economics and have spent almost my entire career as a trader in investment banking, it wasn’t until my introduction to Austrian Economics six years ago that this picture of human action became clear. In a point of clarity, the true study of economics does come packaged in different philosophies such as Keynesian, Chicago School or any other derivation. These classifications of study merely rationalize government intervention into the process of human exchange. Often in life, the seemingly complex can be understood through simple applications. This holds no more truth than in the study of economic issues. The basis upon which we act can be relegated to the following few truths:

 

Resources are scarce

 

Every action has a cost of lost opportunity

 

Exchange occurs when we trade something deemed less valuable for something of more value

 

Value does not exist until an exchange takes place

 

Solutions do not exist, only trade-offs.

 

History is the laboratory results of human action and experimentation of government intervention.

 

 

Over the last several years, I have written extensively on the principles of economics and the virtues of liberty. I have been fortunate to have some of my articles published by the esteem Von Mises Institute (www.mises.org) and on the editorial pages of local newspapers.