The True Costs Of Bad Economists, Explained

The eloquent nineteenth-century French economist and liberal Frédéric Bastiat famously noted that what separates a good economist from a bad one is the ability to consider both the seen and the unseen. A bad economist does not recognize the costs down the road, and may thus come to advocate all too costly solutions (as in the commonly used analogy, peeing in one's pants in the dead of winter to escape the cold—warm at first, followed by freezing).

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The distinction between the seen and the unseen is an important one, without which the true trade-off cannot be understood. And the trade-off is core to economics: every action is a choice, which means the alternatives must be known to figure out the better alternative.

Anyone can suggest solutions to problems without reference to the cost. But those are not actual solutions, since they may be what make us worse off later on.

Economics is about economizing. Without the unseen, there is no proper choice and no economics. There is only a fairytale.

It is thus the unenviable task of the economist to point out that the fairytale is nothing more than that, and that reality places strict limitations on what can be achieved and how. Yet although economists often do construct counterfactuals to assess the value of an alternative, they tend to overlook the fact that what currently is (and is seen) was previously a potential (and unseen).

What exists today is not the problem to be solved, but the solution to be explained.

It is highly unfortunate that economists tend to misunderstand our economic present in this way.

When looking at the economy and assessing its efficiency or value, it is irrelevant what one might theorize as an optimal solution. Taking what is as a starting point and imagining what could have been instead is of no value unless one recognizes where the status quo came from. The present is as much a result of the past, the actions and choices made, as the future will be of the actions and choices currently being made or that are yet to be made.

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