A Latin saying favored by 19th-century revolutionaries reads: Fiat justitia, et pereat mundus. “Let justice be done, though the world perish.”
That is not an economist’s way of thinking, but it does seem to be how competing ideologues and moralists increasingly view decisionmaking.
Consider polices advocated by many on the left or the right and it soon becomes apparent that they are thinking not practically, but almost theologically — unable to tolerate compromise or trade-offs.
Economics is all about allocating scarce resources. There are no gains without costs. Is one really prepared to let the world perish rather than allow the smallest injustice?
Moralists don’t perform cost-benefit analyses to reduce the most sin with the least effort. They don’t think of trade-offs among the Ten Commandments. Such thinking for them carries a whiff of the devil’s sulfur.
With politics becoming a secular religion, and its practitioners taking similarly inflexible stands, it might be worthwhile to consider how an economist would approach some of the vital issues today.
In understanding people’s preferences, economists consider not what they say but what they do — their “revealed preferences.” Many today believe, with justification, that climate change poses an existential threat to the planet. Yet if one reflexively opposes nuclear power or fracking for natural gas, all of which can reduce carbon emissions even if they are themselves not perfectly green, can one really believe in imminent global catastrophe? Or is one thinking like a moralist who will not choose one sin over another?
The Green New Deal, endorsed by many progressives, proposes to phase out internal-combustion engines and retrofit all buildings in the U.S. But it also calls for guaranteed jobs, suitable housing and healthy food for all. Surely, if the planet faces a climate emergency, one should postpone other causes. Insisting on addressing all problems at once means that none is particularly urgent.
Scarcity exists; imperfect choices must be made. Great literature, as well as great economics, has illustrated this truth. Anton Chekhov repeatedly criticized the self-indulgence of those failing to allocate time, money and energy effectively. For him, high-minded waste is never desirable. Fyodor Dostoevsky, in “The Brothers Karamazov,” portrays Ivan and Alyosha as high-mindedly agreeing they would not save millions of children if it meant sacrificing even one of them. Is that really humane?
The fact is, we can identify approaches more likely to be effective in attaining goals — and so are justified ethically as well as practically. On topic after topic, there is a surprisingly robust, data-backed consensus among economists to guide us.
For example, while the right has a proclivity for lowering tax rates and the left for raising them, economists understand general principles based on estimating trade-offs. A maximum marginal tax rate of, say, 20 percent, would be as misguided as, say, one of 80 percent.
Or consider the minimum wage. Just as eliminating it would hurt many workers, raising it too far would reduce employment opportunities for precisely those in greatest need of them. Today, most American economists favor a range between $12 and $15 an hour. Far above or below these levels, harm will outweigh good.
How about trade policy? Neither protectionism nor free trade without any provision for worker retraining or support holds much sway with economists. A portion of the overall gains from free trade could be used to help those it hurts, and the country would still come out ahead.
As glaciers melt, wealth inequality rises and debt balloons, it’s time for a recommitment to prudence — to pursuing workable policies instead of staking out impossible positions on the left or the right.
The great challenge for economists today is to find new and better ways to make their cases and kindle a general appreciation for economic ideas such as incentives, trade-offs, marginal utility and revealed preferences. Learning to practice the dispassionate analysis of data would be helpful, too. Citizens making informed choices are good for the health of democracy.
Gary Saul Morson is professor of Slavic languages and literature and Morton Schapiro is professor of economics and president, Northwestern University. They are authors of “Cents and Sensibility: What Economics Can Learn from the Humanities.” They wrote this article for the Washington Post.