Jorge Sá Drucker speaker Drucker expert

A little philosophy, said Bacon, inclines man to atheism; but depth in philosophy leads him to God.

The same is true in economics. A little economics leads you to paradoxical conclusions and measures where the amendment is worse than the sonnet. Too much economics drives a man to common sense.

And what is common sense? Answer A. Smith: What is prudent in the management of private affairs can hardly be foolhardy in the public. Managing the money of a family and a community should follow the same principles. Give me a man with loose finances, who spends more than he makes and lives on loans, and we have a ruler who bankrupts a country.

If common sense is indispensable in both private and public spheres, it is undoubtedly easier to lose in the latter.

Sometimes deliberately because society is made up of various groups (civil servants, farmers, industrial workers, trade workers, etc.) and in addition to having common interests, i.e. general interests, each group also has special interests of its own. Where the benefit of some is the cost of others: there are no free lunches.

Other times common sense is inadvertently lost because the division of labor increases the complexity of human societies. And here comes pure stupidity.

For example when promoting policies that create jobs. Period. Forgetting that the goal is to create value, that is jobs that are productive. That contribute to the well being. In primitive tribes there is no unemployment (but people walk naked). Nor is there in war. Or in the communist countries. Or in Hitler’s work camps. Cui buono? Who benefits?

Does increasing the number of civil servants create purchasing power? Very well. At the expense of removing it from the private (with taxes). And to allow them to spend on consumer goods and services in the majority of times much more useful.

Public credit to finance projects that privates do not want? But why don’t these want them? They are experts. They are not masochists. They want to make money. So if they don’t lend is because it’s a bad deal. Leads to lose. The destruction of value. GDP (± national income) is the sum of the value added (profit + etc.) of enterprises.

Tariffs on imports? Well, some industries benefit. But most consumers get worse. And industries that use beneficiaries’ products as parts of their final product are also harmed. Therefore, as J.S. Mill said, foreign trade gains for any country do not come from exports but from imports. In limit if I can import very cheap and good, I almost do not need to work.

Unemployment benefits without (at least) (serious) training and (always) active job search? If the allowance equals the minimum wage, it discourages work. If lower makes people receive less than if there was no minimum wage. And in both cases there is a loss of self respect.

In a society of increasing division of labor and consequent complexity, there are always two sides to the coin: increased credit is increased debt; Higher farm prices result in poorer living standards for city dwellers; allowances? taxes are spelled out; and so on.

That is why there are two major forgetfulness in the economy. The first is the forgotten man of Graham Summer:

When A observes that X is wrong, he goes right next to B and they vote for a law that forces C to do whatever they want to solve X’s problem. This C is the forgotten man, A and B’s lab rat.

With the aggravation that often neither X improves and then A and B make sorcerer’s apprentices.

Because they forget that in a system (society) when it moves in one part there are always effects in others. Secondary effects.

And that’s why there are so many atheists (because they know a little philosophy). And so bad economists because they only see the immediate effects. God is in the whole. And the progress in the global.