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Scarcity Is Not Prosperity

In my latest column for AIER I satirize the mistaken notion that scarcity is prosperity. A slice:

Why is my income so high? Answer: economic ignorance! Nearly every cent that I earn is generated by my satisfying other people’s demands for reduced economic ignorance. Sometimes, as in the case of (many of) the students who I teach at George Mason University, the demand for the economic enlightenment that I supply comes directly from those who pay for it. Other times, as when organizations such as the Fraser Institute and AIER pay me to lecture or to write, the demand comes, ultimately, from donors who hope that my speechifying and wordsmithing will fall in enlightening ways on minds still benighted by economic ignorance.

And so (horrors!) if most people already understood basic economic realities, I’d be unemployed. If most people already knew the truths that I teach – truths such as that protective tariffs create no new jobs on net while they reduce most people’s living standards, that minimum-wage legislation hurts many of the very workers it is meant to help, and that antitrust interventions stymie rather than stimulate economic competition – no one would pay me to do this job that I so enjoy doing.

And while my being unemployed and penniless would be tragic enough, this essay is not about me. In fact, join me in forgetting about me. Think instead of the countless people who benefit from the economic ignorance that other people pay me to dispel.

Think, for example, of wine retailers and vintners. I spend a significant portion of my income on wine. In a world without economic ignorance, no one would pay me to do what I do and, thus, I’d have no income to spend at my favorite wine shops. Wine sales would fall. Some sales clerks would lose their jobs, as would workers in vineyards. Likewise for workers in the food industry. I spend an even larger portion of my income at restaurants. In a world without economic ignorance, I’d earn no money to spend on dining out. Restaurants and their cooks and wait staff would suffer – as would, of course, all the workers whose efforts are required to supply restaurants with furniture, food, and drink.

I also spend a good deal of money on clothing. Unable to earn income in a world of full economic enlightenment, I of course would buy less clothing. Nordstrom and other clothing retailers would feel the pinch – as would their workers.

Obviously, what holds true for wine, restaurant meals, and clothing holds true also for everything else on which I spend my hard-earned income.

An econometrician could quantify the value to humanity of the economic ignorance that I annually work to reduce. This scholar could so quantify, with a precise dollar measurement, the value of this economic ignorance by tracking all of my spending, and then tracking the spending by others – by wine-store owners, by restaurant waiters, by clothing retailers, etc. – that my spending makes possible.

I myself haven’t done such a tracking of the long and economically stimulating effects of my spending. But I’m sure that it runs annually into the tens of millions of dollars. And I’m just one economist! Add the full value of the spending that my income makes possible to the value of the spending by thousands of my fellow economists, and it becomes undeniable that one crucial source of modern humanity’s prosperity is economic ignorance, for without this ignorance we economists would earn no incomes to spend.