No Free Lunch: Economics for a Fallen World: Third Edition, Revised

Chapter One: Introduction to Economics 29 Here are two, parting, introductory thoughts. The great economic journalist Henry Hazlitt, in his book Economics in One Lesson , gave us the mark of a good economist: Everyone can see the immediate effects of a given choice, but only the good economist will see the final effects. As a professor in the field of economics, I will continually work to give you the tools to be able to trace out the final effects of a given action. For instance, when the government raises the minimum wage, everyone can see the initial result: those that have (and keep!) minimum wage jobs get a pay raise. But is that the final effect? You’ll have to wait until chapter 5 to get the details, but that is not the end of the story! Policymakers that make decisions based solely on short-term effects will often see results exactly opposite their intent—in the long run. But we all know what’s said about the road to hell . . . it’s paved with good intentions. I’ll make sure your economic thinking won’t go down that road! The final introductory thought is about 1st vs. 2nd best worlds. Or you could say, the perfect vs. the good enough. A Christian worldview recognizes that we live in a fallen world; therefore there is no utopia until Christ returns. As we examine economic choices, we will often point out the ideal state (or the 1st best world); but we won’t stop there. We’ll spend quite a bit of time in the 2nd best world because it’s the world we usually live in. For example, when we come to the chapter on money, we’ll see that most countries have central banks and a 1st best world would have no central bank. But since we live in a world with central banks, we’ll see how to make them as effective as possible, while trying to minimize the harm they can do. Maybe you don’t even know what a central bank is at this point. Not to worry, you will! And more importantly, you must, as central bank actions (and many of the other policy choices we’ll study) have a tremendous effect on your life. Maybe you’re not convinced. But most of you would like to have lower interest rates on your future college loans; most of you would prefer your savings account pay a higher interest rate; many of you would like a job when you finish school. Our study will show you how policy actions can affect many of the day-to-day aspects of our lives. IT’S A WRAP! Enough is enough! At least you have enough to understand some of the theology that underpins this text, as well as some of the assumptions and pitfalls that accompany economics. In the next chapter we will focus on some of the essentials of economics, as you’ll begin to see the mutually beneficial aspects of social cooperation, or what we commonly call ‘markets’—the result of what Adam Smith called our natural propensity to “truck, barter and exchange.”