What economists see that most don't
Donald J. Boudreaux
Economists see the world differently
than non-economists. Often, that involves nothing more than our habit of
looking not only at the most obvious facts of reality but also at the
less obvious facts.
For example, when Americans buy more
imported steel, everyone sees that some steelworkers in Pennsylvania and
Ohio lose their jobs. Economists, of course, also see these job losses.
But unlike most non-economists, economists see the jobs that are
created in America as a result of greater imports. Economists see that
foreigners use dollars earned selling steel to us to buy American
exports or to invest in America. Each of these uses creates jobs in
America.
Also like others, economists see the
heartache, headache and hardship that often come with job loss. Yet
unlike others, economists see that job losses occur anytime economic
change occurs. And foreign trade is not a unique source of economic
change. Shrinking or even stopping foreign trade will do nothing to
prevent American consumers from changing their spending patterns and,
hence, will do nothing to prevent American workers from losing
particular jobs.
An even deeper and more counterintuitive
way that economists see the world comes from our understanding of prices
and wages. Many non-economists bemoan the fact that firefighters, EMTs
and other first responders earn only a tiny fraction of the salaries
paid to Ben Roethlisberger and other professional athletes. The typical
thought is that entertaining spectators is less important than is
putting out a raging house fire or rushing a stroke victim to the
hospital.
Well, yes and no. Given the choice of a
world with plenty of high-quality professional athletes but very few
first responders, or very few professional athletes but plenty of
high-quality first responders, almost everyone would choose the latter.
Saving lives is indeed more important overall than is being
entertained by pro athletes. But such an all-or-nothing choice isn't
what we face.
The choice we face for almost any economic
activity is whether to increase incrementally the amount of that
activity. We ask, for example, how much value we get from adding an
elite quarterback to our team compared to not doing so. And how much
value do we get from adding an EMT to our fire and rescue squad compared
to not doing so?
When these questions are asked, the
answers surprise most people. Because the NFL quarterback skill set is
so rare, an elite quarterback's value to NFL teams and their fans is
huge. That's why the Steelers pay Big Ben so handsomely. But if lots of
people could play quarterback as well as Big Ben, there'd be no reason
to pay him millions.
In contrast, because the excellent-EMT
skill set is not rare, we have many more EMTs than we have skilled
quarterbacks. So an additional EMT's value to society is far less than
is an additional quarterback's value. The pay of each reflects this
fact.
And we should applaud, for this means our
world is one with many highly skilled first responders, if only a small
handful of highly skilled quarterbacks — which is much better than the
reverse.
Donald J. Boudreaux is a professor of economics
and Getchell Chair at George Mason University in Fairfax, Va. His column
appears twice monthly.
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