Henry allowed me to bask in my self-generated warmth, but only for a moment. Still smiling, he rejoined, “In this lies almost the whole difference between good economics and bad. The bad economist sees only what immediately strikes the eye; the good economist also looks beyond. The bad economist sees only the direct consequences of a proposed course; the good economist looks also at the longer and indirect consequences. The bad economist sees only what the effect of a given policy has been or will be on one particular group; the good economist inquires also what the effect of the policy will be on all groups.”
“You know, Henry, I am wondering, how we deal with the root of this problem,” I said. “The suboptimization principle is well-known in the business world. It’s not like the distinction is not obvious. Besides, we’re not dealing with rocket science here.”
“The distinction may seem obvious,” said Henry. “The precaution of looking for all the consequences of a given policy to everyone may seem elementary.”
I wanted to ask, “Where are you going with this, Henry?” but he must have anticipated my thought. He held his hand up, palm toward me, as if controlling traffic, and continued, “Doesn’t everybody know, in his personal life, that there are all sorts of indulgences delightful at the moment but disastrous in the end? Doesn’t every little boy know that if he eats enough candy he will get sick? Doesn’t the fellow who gets drunk know that he will wake up next morning with a ghastly stomach and a horrible head? Doesn’t the dipsomaniac know that he is ruining his liver and shortening his life? Doesn’t the Don Juan know that he is letting himself in for every sort of risk, from blackmail to disease? Finally, to bring it to the economic though still personal realm, do not the idler and the spendthrift know, even in the midst of their glorious fling, that they are heading for a future of debt and poverty?”
“Well, of course they should; Henry,” I said. “These are elementary truths that they have to know; they aren’t stupid. I’m thankful that those people are distinctly in the minority or, at least, I hope they are. So, how does what you are saying play out in the field of public economics?”
The glow suddenly disappeared from Henry’s face. The moment I saw it, I knew that what was coming would not be good. I was right.
Shaking his head and sighing, Henry said, “When we enter the field of public economics, these elementary truths are ignored. There are men regarded today as brilliant economists, who deprecate saving and recommend squandering on a national scale as the way of economic salvation; and when anyone points to what the consequences of these policies will be in the long run, they reply flippantly, as might the prodigal son of a warning father: ‘In the long run we are all dead.’ And such shallow wisecracks pass as devastating epigrams and the ripest wisdom.”
Said I, “I know. I’ve heard that expression—don’t like it—never did. It’s insulting.”
“You know, Henry, I am wondering, how we deal with the root of this problem,” I said. “The suboptimization principle is well-known in the business world. It’s not like the distinction is not obvious. Besides, we’re not dealing with rocket science here.”
“The distinction may seem obvious,” said Henry. “The precaution of looking for all the consequences of a given policy to everyone may seem elementary.”
I wanted to ask, “Where are you going with this, Henry?” but he must have anticipated my thought. He held his hand up, palm toward me, as if controlling traffic, and continued, “Doesn’t everybody know, in his personal life, that there are all sorts of indulgences delightful at the moment but disastrous in the end? Doesn’t every little boy know that if he eats enough candy he will get sick? Doesn’t the fellow who gets drunk know that he will wake up next morning with a ghastly stomach and a horrible head? Doesn’t the dipsomaniac know that he is ruining his liver and shortening his life? Doesn’t the Don Juan know that he is letting himself in for every sort of risk, from blackmail to disease? Finally, to bring it to the economic though still personal realm, do not the idler and the spendthrift know, even in the midst of their glorious fling, that they are heading for a future of debt and poverty?”
“Well, of course they should; Henry,” I said. “These are elementary truths that they have to know; they aren’t stupid. I’m thankful that those people are distinctly in the minority or, at least, I hope they are. So, how does what you are saying play out in the field of public economics?”
The glow suddenly disappeared from Henry’s face. The moment I saw it, I knew that what was coming would not be good. I was right.
Shaking his head and sighing, Henry said, “When we enter the field of public economics, these elementary truths are ignored. There are men regarded today as brilliant economists, who deprecate saving and recommend squandering on a national scale as the way of economic salvation; and when anyone points to what the consequences of these policies will be in the long run, they reply flippantly, as might the prodigal son of a warning father: ‘In the long run we are all dead.’ And such shallow wisecracks pass as devastating epigrams and the ripest wisdom.”
Said I, “I know. I’ve heard that expression—don’t like it—never did. It’s insulting.”
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