When the news says "... the race track will pump five million dollars into the local economy ..." it's worth thinking about the flip side. Where does the money come from? Wealth isn't created out of thin air. In this case, gains achieved by one community are at the expense of losses experienced by scores of others. The same thing happens when any big project by business or government is lauded for "creating jobs" or "increasing payrolls". Ask: Where's it coming from?
If the numbers are too big to be grasped, divide by the number of people involved and think on a per capita basis. If low-probability but high-impact events are potential scenarios, compare weighted benefits to costs. But don't just study part of the system; don't fall for the wizard's patter and "pay no attention to the man behind the curtain". Look at the whole picture.
Many years ago, Henry Hazlitt's Economics in One Lesson described good economics as simply the understanding of all effects, on all people, of human actions — not just the local consequences, or the results for a short interval of time, or the benefits to a privileged few. Hazlitt called for the analysis of what didn't happen — for the possible futures that were cut off by a bad policy choice, for the jobs that never came into existence, and for the money that wasn't spent on one thing because it was forced to go pay for another.
The principle applies far beyond economic activity. For any decision, what are the large-scale and long-term consequences? Do we feel good today at the expense of our grandchildren, or by taking resources from people on the other side of the globe, or via ignoring the risk of disaster in an (apparently) unlikely outcome? Beware! Particularly take care when the proponents of a choice are those who will profit directly, while the costs are diffuse and spread widely over people who may never be aware of what they are missing or the source of their loss.
We can't all become wealthy by picking each other's pockets, or through selling promises to one another. Once in a while, somebody must work, think, create, build, teach, learn, grow....
Monday, November 22, 1999 at 06:37:10 (EST) = 1999-11-22
(correlates: CelebrityTakeover, MillionsOfTonsOfOil, MySpeciality, ...)