Acton Institute Powerblog

Do economists agree?

(Photo credit: Ministério da Indústria, Comércio Exterior e Serviços, Brazil. This photo has been transformed. CC BY-SA 2.0.)

Listen to politicians or cable news, and you will get the impression that economics is merely a thin veil for partisanship, the greatest mercenary discipline for justifying any policy. You can seemingly find at least one economist to agree with you; liberal economists favor liberal policies, while conservative economists favor conservative policies. While there are certainly some economists who make their discipline mercenary to politics, there is a surprising amount of agreement within the discipline. Jay Richards makes the case in the latest installment of the Journal of Markets and Morality that economists from a broad political spectrum and economic schools of thought agree on core economic facts. He outlines 30 facts on which he found a broad consensus between economists from varying schools of thought. Here is a selection.

Economists agree that scarcity is real. Scarcity means that resources in an economy are limited, i.e., there are less resources than there are ways that people would use those resources. Additionally, individuals face opportunity costs. The concept of opportunity cost follows directly from the idea of scarcity. For a given action, the opportunity cost is whatever you cannot do because you took that action. Individuals face opportunity costs in many, many situations. For instance, what is the opportunity cost of earning a four-year college degree? First, there is the cost of tuition and room and board. Add on transportation costs of moving to a new area, and we have the total cost. But if we stop there, we are missing the opportunity cost of the action. When you attend school, you are also giving up, among other things, four years of earnings from whatever job you would have had. The opportunity cost is the all the things that you must give up to attend college. Through this insight, economists can reveal hidden costs that could go unnoticed.

Economists also agree that “a society of well-defined and enforced property rights will be better off than a society with ill-defined and poorly enforced property rights.” Well-defined property rights result in a system where individuals can plan and invest for the future. For example, if you have no idea whether you will own your house tomorrow, what incentive do you have to make improvements? Furthermore, in a society defined by violence and theft, you will have to waste considerable time and money to protect your property. Savings and investment in new ideas increases general prosperity in the future.

Economists agree that “the percentage of the world’s population living in absolute poverty is at an all-time low and is much lower today than in any decade in the past.” This may seem surprising given internet commentators who dub 2020 the worst year in history. In reality, economic growth has driven a global increase in prosperity. Around the globe, fewer people live in absolute poverty than ever, an achievement that should be celebrated.

While many of these facts seem basic or even intuitive, they are extremely useful, even necessary to our understanding of the world. Richards points out that the majority of Americans do not understand even the simplest economic ideas, such as scarcity. Indeed, the most fundamental contribution of economics is the ability to systematize fundamentals of human behavior and reveal an unseen phenomenon beneath the seen. The consensus of economists should be an encouragement, showing that the discipline is not merely mercenary. Instead, economics can reveal truth about the world and help us solve real problems.

Noah Gould

Noah is a Programs Associate at the Acton Institute where he regularly contributes to the blog and Religion and Liberty. He is a graduate of Grove City College, where he studied Economics.