Apr 11

Written by:
4/11/2009 8:24 AM 

When I was a young man, life was a bit simpler.  There was a thing called Common Sense.  People thought that things either made sense or they didn’t make sense, and easily described them in that way.  Nowadays it’s a bit more complicated, and one of the most interesting additions to that vocabulary is “economic sense”.  Recent events have caused me to reflect a lot on the notion of economic sense, and I’ve come to the conclusion that it is essentially an oxymoron. 

People usually say that something makes “economic sense” when they mean that it doesn’t make sense any other way, and is in fact irrational and ridiculous, but because of our arcane and bizarre set of economic rules, somebody can make a ton of money doing it anyway.  Take, for example, off-shoring.  It makes “economic sense” to make a computer chip in Los Angeles, ship it across the Pacific Ocean to China, have somebody stick the chip into a board, and then ship that board back across the Pacific to be sold again in Los Angeles. 

But of course, such a process makes no real sense at all.  The young lady sticking the chip on the board in China has no more skill than someone in Los Angeles would have, and in terms of resources expended it is ridiculous to ship that part to China in order to have some simple operation done.  The added shipping and handling, the fuel used, the carbon pollution, the bookkeeping and currency transfers, the customs and import/export, the time required – all of these are far in excess of what is needed to accomplish the task.  It is only because our system of valuing labor and materials is so out of whack with reality that this kind of silliness has become accepted as making “economic sense”. 

Examples abound.  It makes economic sense to make a $500,000 loan to a family with five kids making $35,000 a year.  It makes economic sense to destroy our farmland and turn it into subdivisions.  It makes economic sense to bring to extinction thousands of species, exhaust our water supplies, fish out our oceans, remove mountaintops and dump millions of tons of toxins into our rivers and streams, or poison our food supplies with chemicals.  It makes economic sense to exploit and starve people in poor countries while extracting their nation’s resources at pennies on the dollar to be consumed somewhere else.  There is no action so insane, incompetent, malevolent or self-destructive that someone somewhere cannot make money doing it. 

The fact is that economics, far from being any kind of science, has become a bizarre and insane cult bent on the destruction of the planet and everyone on it.  But we all seem to be drinking the Kool-Aid.  People shrug their shoulders at the irrationality of it all, but just assume that if it makes economic sense people are going to do it.  We imagine ourselves to be rational actors motivated by “self-interest”, and we are trained to do anything that makes us a bit more money or reduces costs, whether or not it destroys everything we hold dear in the long run.  What can you do, we say.  If it’s cheaper, people are going to buy it, no matter where it came from or what had to be done to make it. 

It doesn’t have to be that way.  Economic Sense is a mindset, and more and more a mindset at odds with our own survival.  Today our need is much more for Common Sense, an alternative mindset that sometimes seems to be headed for extinction.