Bryan Caplan: Always Keep Your Eye on Production
As a child, I was a bad baseball player because my mind wandered. Adults and teammates tried to improve my performance with a classic adage: "Always keep your eye on the ball." I didn't change, but their advice was excellent nonetheless.
Laymen often criticize economics for its arcane complexity. When I talk with non-economists, though, so many gravitate toward Rube Goldberg stories. Random example: Yesterday someone suggested to me that failing to fire under-performing government employees is actually economically beneficial, because secure jobs sustain the middle class, the crucial bedrock of our economy.
When I encounter stories like this, I reply with an adage I urge my fellow economists to adopt: "Always keep your eye on production." Whenever analyzing an economic problem, you should, by default, ignore longs chains of social causation and ignore distribution. Instead, remember that mass production is the root cause of mass consumption. Then ask yourself, "How will whatever we're talking about change the total amount of stuff produced?"
Productive societies are rich societies. The rest is details.
And, in a followup post:
When they're in major wars, governments often seem to suddenly discover my "Always keep your eye on production" principle. Case in point: During the New Deal, Team Roosevelt eagerly pushed militant unionization, using now-standard arguments about the hidden economic benefits. Like: "Unions boost demand by putting money into the hands of people who will spend it," and "Unions encourage technological progress by raising the price of low-skilled labor."
Once the U.S. entered World War II, however, the Roosevelt administration asked for - and received - the famous No-Strike Pledge. Unions promised not to strike for the duration of the war, and their real wages eroded in the face of high inflation. The reasoning behind the Pledge was clear: The war effort depends on production, strikes reduce production, so strikes are bad. What about all those arguments about the hidden wonders of militant unionism? Whatever - we're got to win the war.