Roshambo Economics

Usually we think of economics as studies in supply and demand, price and consumption, in a setting of scarcity. But scarcity can come not from the vagaries of supply and demand, but also from logic. And economics is the study of human behavior when choices must be made — much like political science is also the study of human behavior in a realm of forced choices.

Another way to think about it is not like finding the “sweet spot” of optimal amounts of guns and butter, but instead trying to plan out a game of rock-paper-scissors. The result is, at least on the double example that I find here, a preference for short-term rather than long-term utility.

People want to eat as much as they want, not endure the unpleasantness of exercise, and still lose weight. Obviously, you can’t have all three — not because food, exercise, or weight loss are expensive, but because once you have two of those, the third is necessarily excluded from what can be achieved. You can eat as much as you want and still lose weight, but only if you exercise a lot. You can skip the exercise and lose weight, but only if you restrict your food consumption. Or, you can eat at lot, not exercise, but accept weight gain as the consequence.

As it turns out, YMMV, but the most common choice seems to be weight gain rather than exercise or reduced consumption. Weight gain involves deferring a long-term pleasure, while exercise and reduced consumption involves deferring a short-term pleasure.

The body politic makes similar choices. We want the government to provide services (principally social welfare and defense), low taxes, and balanced budgets. Can’t have all three. We can have robust services and low taxes, but the debt will rise. Or, services can be robust and the deficit will make sense, but only if we pay for it with high taxes. Or, We can enjoy low taxes and reduced governmental debt, but only if we make do with fewer services from our government.

As a people, we have opted for long-term debt rather than deferring short-term pleasures of low taxes and governmental services. This is reflected in our current political dynamic in which there is much sound and fury but no substantial action over our public debt, and adamant refusal on the part of either major political party to meaningfully cut social services or meaningfully raise taxes. The behavior of the parties accurately reflects the desires of the voters as a whole.

What tripartate, mutually-exclusive choices show us is that humans have a preference for immediate over long-term gratification.

Burt Likko

Pseudonymous Portlander. Homebrewer. Atheist. Recovering litigator. Recovering Republican. Recovering Catholic. Recovering divorcé. Recovering Former Editor-in-Chief of Ordinary Times. House Likko's Words: Scite Verum. Colite Iusticia. Vivere Con Gaudium.

One Comment

  1. Great post. Human experience also shows us that preferring the long-term is directly commensurate with success, so, if we want to be a successful nation in the future, we better develop a more long-term perspective on economic well-being.

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