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Wednesday, 30 November 2011

Opportunity Cost - I

This seems to me to be almost the profoundest concept of economic thought. It cannot be denied. Keynesians try to do so. Austrians face up to it.

If you make a choice you forgo other choices. If you buy more cheese you can afford fewer apples. If you decide to go on a cruise you will have less cash to leave to your kids.

Every one of us makes decisions of this kind many times a day. Whoever reduces these decisions acts against our interests. Governments exist to do almost nothing else. They reduce our choices.

When the local authority taxes me and spends money on gritting pavements it may suit me. But the money they take from me leaves me less to spend on taxis. Where does their moral authority come from? Where do they get the right to make decisions on my behalf?

When the national government taxes me and spends money on the NHS I may from time to time benefit. But the same questions apply. I have less to spend on insurance or to give to medical charities.

The statist/progressive mindset would have it that their planners and experts are better placed to make these decisions for me than I am. They allege that my vote (or rather the aggregate votes of all citizens) gives them the right to do so.

Two questions:

Where’s the moral logic? Experts and planners derive their rights from where?

Where’s the practical logic. Experts derive their wisdom from where? They know more about what will suit me and my 60 million fellow Brits? Soviet experts made decisions upon what would suit millions of Russians and Ukrainians etc etc. The Russians and Ukrainians died in their millions. Some starved. Some were murdered for resisting.

Our progressive friends believe that we can identify the right people to make decisions on our behalf. How? Catholics believe that all men are sinners. My personal inclination is to distrust anyone who wants to decide stuff for me. There is a class of people who are indifferent to their own wellbeing and yearns only for universal wellbeing? And we can easily spot them? Please!

In Britain we have the Labour and LibDems who claim to be the good guys who obviously yearn for universal wellbeing. We have Tories who have learnt some lessons: good intentions don’t guarantee good outcomes. They are seduced by our system into promising that... Well, it is hard to be sure what good intentions they have in mind and what outcomes they feel confident in promising. Some can see that the easy promises of the statist/progressives are empty. Few declare that the answer is to allow individuals to make decisions for themselves.