Last term, my fellow staff columnist Sam Bonderoff wrote a series of humorous columns in which he satirically characterized many of the majors at Dartmouth. Intending to help out the sophomores struggling to declare their majors at the time, however, Bonderoff unfortunately claimed that only earth sciences are more boring than economics. I, an economics major, have been yearning to demonstrate how stimulating a discipline economics is, and today I have finally found the time to pen a rebuttal against him.
Allow me, then, to recapitulate some of the important economic insights that I have elaborated in the past.
In my "Let Capitalism Take Care of the Environment," published more than a year ago, I explained that the solution to environmental destruction is the creation of markets that incorporate the cost of negative externalities. This is the cost of production that the market process of price discovery fails to incorporate into the output's price.
Heeding to this insight, policymakers of Southern Africa began to endorse wildlife privatization in the late 1970s and early 1980s. The result has been astounding; the number of elephants in Zimbabwe, for instance, has grown from 30,000 in 1980 to 74,500 last year. On the other hand, Eastern Africa ignored the economic wisdom and nationalized its wildlife in the 1970s. Despite banning hunting almost entirely, Kenya experienced constant decline in the number of elephants from 65,000 to 25,000 last year, because the government failed in preventing profit-driven poachers from exploiting ivories' persistently high demand.
Economics thus addresses our appetitive desire to live -- reflected in environmentalists' obsessive endeavors to maintain our long-term survivability on the earth.
In my "Caveat for Government Majors," run in this paper last summer, I summarized a few recent studies demonstrating that the growth of Asia is overrated. I wrote the column to undermine the myth perpetuated particularly among the political scientists that the success of the so-called Tigers can be attributed to government intervention.
The argument is based on the analysis of these economies' Solow residuals, or what is more typically known as total factory productivity. In explaining economic growth, one ought to subtract the contributions of labor and capital accumulation to total growth to derive the residual, which captures the level of efficiency with which the economy expends its resources. This residual, or TFP, is the determinant of the living standard.
With the exception of Hong Kong and Japan, all Asian countries have experienced mediocre rates of TFP growth, for their national growth has been fueled primarily by mobilization of labor and capital into high-productivity sectors. Unfortunately, this pattern of growth is unsustainable in the long run, because sooner or later every economy arrives at a point beyond which the resources can accrue only at a moderate rate. A large number of studies indicate that government intervention stifles TFP, the only source of long-term growth; they projected the recent slowdown of such economies as Korea and Singapore.Economics hence addresses our desire to seek material comfort.
During the U.S. presidential campaign, I explicated in my "Why the Presidential System is Obsolete" the cause of this nation's worsening political apathy. Utilizing a game-theoretic model, I showed that this phenomenon is entirely consistent with Nietzsche's prediction of the "last man"; that is, an excessively rational human being who no longer possesses any desire for recognition because he or she has no internal sense of justice. Motivated only by appetitive desires, that being channels his or her energy entirely into economic competition.
Today's voter indeed resembles the last man, whose rationality precludes devoted political participation. Well aware of his or her insignificant role in elections, the voter calculates the opportunity cost of his or her time spent on elections, and sees the forgone 20 minutes of paid time more valuable than such time spent on registration and voting.
Economics, with its perennial assumption of perfect human rationality, thus is increasingly capable of predicting human behavior.
There was a time when humans frequently sought to attain the recognition of others, even if such action endangered their material well-being. A samurai warrior in feudal Japan, for example, would commit suicide, or seppuku, to preserve the honor of his family when he failed in a way that could implicate his family. In fact, Rousseau invoked this analysis of human nature to criticize modern liberals' social-engineering project that entailed the revaluation of the role of appetitive desires as the primacy of human existence.
However, the liberal democratic institutions have so fundamentally reoriented our nature that we have remarkably transmogrified ourselves into the very creatures envisioned by such modern liberals as Hobbes and Locke.
Economics -- the dismal science -- is indeed fascinating, for man's psychic evolution has legitimized its power. For this reason, I study it as a master science.
