Why You Can’t Have It All

Not every desire of every person can ever be fulfilled, no matter how big an economy grows. The basic fact of essential scarcity is the bedrock of all economic thought.

That means you always have to decide what you want the most with the necessarily limited means available at any given point in time. You can't have it all.

"Solution" is the word usually used when someone asks things like "But how do we solve the problem of poverty?" or "What do we do about all these people who can't find jobs?"

As long as poverty is defined as a percentage of a certain level of income, it can never be "solved." As long as jobs are defined as doing only the work you want to do and only at the pay you think it's worth, it can never be solved.

On the other hand you can ask questions like "How can we best reduce the number of people who live in poverty through on fault of their own?" or "How can we do the best job of getting the price of homes or apartments down to where more people can afford them?"

Notice that neither of those questions imply that poverty will be completely eliminated or that everyone will be able to live anywhere they want. But those are not "solutions," those are tradeoffs.

Unintended consequences are simply secondary or tertiary effects that weren't seen or thought of at the time you take an action. There are almost always unintended consequences with any action taken. Sometimes very minor and sometimes not. But at least when actions are taken by private individuals the people who can be hurt are relatively localized and few in number. When the government does it *everyone* gets hurt.

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Posted in Economics, Politics.

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