Gongol.com Archives: June 2023
June 18, 2023
Economists (and like-minded thinkers) are often accused of being cold-blooded rationalists. And while it is true that the economic discipline has been guilty of important errors, omissions, and oversights -- it turns out that not all decision-making is rational and utility-maximizing, as some economic models have assumed -- it is entirely unfair to dismiss the economical-minded application of logic and analytical rationality to humankind's affairs as being somehow inhumane. Quite to the contrary. ■ Consider this tragedy: Some 500 souls are thought to have perished aboard a boat that capsized en route from Libya to Europe on the Mediterranean Sea. Aboard the fishing trawler were some 750 people from a variety of countries, though a very large number were thought to be from Pakistan. ■ While no solitary cause explains every passenger's reason for taking extraordinary risks with life and limb, it is widely recognized that Pakistan is in the midst of an economic crisis which is driving a substantial refugee surge. Pakistan's population is very large -- with nearly 250 million people, only China, India, the United States, and Indonesia are bigger. And it is very, very poor: The per-capita annual GDP is only about $1,500, or about the per-capita GDP generated by the United States every week. ■ Almost every refugee crisis (including Pakistan's) comes down to a root cause in the realm of what used to be called "political economy": The interaction between government policymaking and economics. The phrase may have fallen out of fashion, but it deserves a revival. That's because there is no more vital set of decisions to be made than how to ensure people can live free from crisis and material deprivation. ■ These are extraordinarily human problems, even if economic analysis must unavoidably deliver its recommendations in the cold language of dollars and cents (or the local currency). But if we blow the big decisions in these regards, people die. They die trying to seek refuge, as in the latest tragedy. But they also die of starvation and public health crises and other entirely avoidable economic causes. ■ A cool, rational approach to questions of resource allocation (which is, after all, what economics generally is) can still be a deeply humane undertaking if it helps to heal those wounds inside political-economic systems that keep people poor. Other countries that are now very rich have been just as poor as Pakistan, even within recent historical memory. Choices made every day have consequences down the road, defining whether things get worse or better. Those lives lost on the sea should serve as a compelling reminder that our problem isn't too much rational thinking; our problem is that there is often too little.
