The Economics of Choices

Updated: Jun 20, 2020

You have a binary moral choice—a choice between freedom and slavery.

Economics is choice making. Choice making is the very act of living—you cannot move from one place to another without making a choice, just as two cannot be understood without one. Doing is still doing even when doing nothing and doing means nothing without choosing. The choices you face throughout life, as if on a time continuum, appear not always binary. That is not to say each possible choice is equal in merit, but rather in some cases there exists a hierarchy of choices, the varying merits of which can only be judged by their outcome or—if plotted along the time continuum of choices—outcomes. You see, there is no statute of limitations on the choices you make. You either did, or you didn’t. Future you cannot rewrite the choices you make. And some choices have outcomes throughout time that reach far into the future; and those outcomes create effects which cause further effects. As a choice maker, then, you must understand that the merit of each choice made is relative to the consequence of the choice, both today and in twenty years; and you must also understand choices today are often interwoven with the choices you will face in twenty years. This necessitates careful thought and consideration for the future—through this analysis, the hierarchy of choices is quickly reduced to a binary choice. And if it is a binary choice, it must be a moral choice; it must be moral because the binary nature of the choice is between that of the highest merit and the rest. So each day you face binary choices seemingly with each breath—choices between right and wrong.

Economics is choice making.

Economics also has to do with the allocation and utilization of resources. Resources are the means you have available to meet your needs. You have two categories of resources at your disposal: time and energy. Your needs are things that can only be exchanged with your resources. Your wants are also things that must be exchanged with your resources. Now, it is important that needs and wants are not confined to the material—even fulfilling a desire of sightseeing or reading a book requires you to ration out some amount of your time and energy. Time and energy are not unlimited either. Every need or want fulfilled reduces your overall stockpile of time and energy, and so here also careful thought and consideration for the future must be exercised continually. The resources spent today can greatly impact their effectiveness and your needs and wants of tomorrow—for bad or for good. However, unfulfilled needs and wants are still unfulfilled needs and wants. Ultimately, resources must be allocated to supply your needs according to your own value judgments of each need or want based on the direct value to you in exchange for your resources. If you value your time more than a particular want, you will forego the want. This is called an opportunity cost, the benefits you would have received should you have chosen differently. And to make matters more complicated, as with the hierarchy of choices, valuing each need and want and your corresponding allocation of resources creates a hierarchy of benefits and relative opportunity costs and these also are based on merit, judged only by the outcomes. It follows that the use of time and energy is a binary, moral choice.

The resources spent today can greatly impact their effectiveness and your needs and wants of tomorrow—for bad or for good.

Exchanging your time and energy for your needs and wants gets to be a little tricky when you place differing values on different things. It would simply be impractical to offer any amount of your time and energy to each person who can supply your wants and needs. Some needs may require a week of your time in exchange and some wants may require so little time it may not be meaningful to the supplier or worthwhile to you. Besides, most people wouldn’t know what to do with all their customers offering coupons for five minutes here and twenty minutes there. And what’s more, the time it takes you to get from one supplier of needs and wants to another will reduce your overall purchasing power from the supplier—you will be running around so much that you would barely realize the fulfillment of your needs, let alone enjoy your wants. And so if you burn through your resources while offering chunks here and chunks there, you will likely not maximize their effect. And resources in fact can be maximized—you can choose to use time wisely or not; you can choose to choose based on your immediate want or you can choose to secure a future need. So how do you offer your time and energy in exchange for your wants and needs practically? It used to be that you would channel your time and energy into the production of a need or want so that you can trade your product (the outcome of your resource allocation) with another person who used their time and energy to produce something you value. But it doesn’t always make sense to trade a quantity of wheat, let’s say, with a quantity of milk because the value you place on receiving a gallon of milk may equal 10 barrels of wheat—not something easily transported or practical to exchange.

To solve the impracticability of bartering and exchanging your time and energy for your needs and wants, a group of people agree on a medium of exchange—one that can be broken down into small units such that you can value your time as you see fit and only allocate the resources to a want or need that matches with the value you place on the item you receive. The way this works is, you spend 10 hours a day growing wheat. Your neighbor spends 10 hours a day caring for cows. You exchange your wheat with all your neighbors for a set quantity of paper or coins that hold an agreed upon unit of value. This is called currency. Now that your time spent in growing wheat has turned into currency, you can use that currency to buy only that amount of milk you need, and reallocate the remainder to other wants and needs; or you can save your currency to increase your overall power to purchase wants and needs in the future. Effectively, your future self is borrowing from today, rather than letting today borrow from your future. But let’s say you can’t grow wheat. Let’s say all you have is time and energy. Now instead of offering impractical segments of your time to different suppliers, you can place a value on your own time by agreeing with your neighbor to spend 6 hours a day working on his farm in exchange for a set amount of currency. With this currency you can purchase your needs and wants anywhere because the society agrees to value the currency equally. When you exchange your time for currency, you make money. When you exchange the money you’ve made with another you obtain a want or need, and the supplier has currency with which to purchase his wants and needs. Money is nothing more than the total amount of time and energy you exchange. Money is the outcome of your choice to exchange your time and energy for the power to purchase your wants and needs. Money can only be created by you. Your money is directly related to the effectiveness of your resource allocation. Just as a choice must be made to allocate time and energy, so must a choice be made to allocate money—the sum of your time and energy exchanged. So even the management of money becomes a binary, moral choice.

Money is nothing more than the total amount of time and energy you exchange. Money is the outcome of your choice to exchange your time and energy for the power to purchase your wants and needs.

If economics is choice making and all choices have to do with the allocation of your resources (time and energy) exchanged through the medium of currency, then economics is a highly personal, strictly individual subject. In fact, given the reduction of all possible choices into a binary moral choice between that of the highest merit and all others, then economics is necessarily moral and must be individually understood. Is it right for someone else to regulate your allocation of your time and energy? Is it right for a committee of people, they could be wizards for all you care, to determine what wants and needs should be available, at what value of your time, and how you must allocate your time and energy? Is it right for another human, or humans, to make your choices for you? To be responsible for making binary moral choices on your behalf that ultimately will have outcomes favorable or not? How can you willingly give up your moral right and responsibility to choose your best course of action through life, understanding that each choice is weighed by its lasting effects? So much for economic policy. The founders of this country recognized each person, equal in the eyes of justice, has a right and responsibility to their own life—not to breathe and follow the leader as an automaton, securing a lifetime of meals for the high price of your time, but to live your life making choices that impact your own life. Surely that is what a right to life means.

You know what’s best for yourself, and if you don’t—only you can carefully think, considering the future, to determine your choices. Don’t ever buy the con when holy politicians claiming membership of a higher class tell you that you’re better off letting them allocate your time and energy, that you’re better off letting them run your life and make your choices for you. They will fail. They will invariably choose wrongly—if not for you, then for your neighbor. And if it’s wrong for your neighbor today, the next decision will be wrong for you tomorrow. Only you can create money, and money can only be created by choice. Money, which is simply your means of exchanging your time and energy for a want or need, can only be allocated by you. You do not own anyone else, and nobody else owns you. If you are left to your own choices, you will face the consequences of those choices, good and bad for good and bad. This should only lead to choices that have immediate and long-term merits based on the projected outcome. For this reason, you make your choices and your neighbor makes his, because by mutually seeking your own best interest and correct choices, wise choice makers will always benefit each other. A third party should not step in to make any choices for you or your neighbor. That is giving up your right to life.

The economist Henry Hazlitt said, “the art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups.”

Economics is choice making. Good economics is choice making with consideration for the future. Choices must be made by you, for you. And all of the free choices you make, and all of the free choices your neighbors make, are what we refer to as the economy. If the economy is not free, you are not free. If someone claims they know better than you and offers to make choices for you, or worse yet, to make choices for another on your behalf, or for your protection, they are saying they are better equipped to live your life than you are. Economic regulation is the regulation of choices. A free market is a society in which you are free to make your choices without coercion or restriction. When others choose for you, or otherwise intervene in your choice making, usually through a policy, the consequential test of merit must be performed. What have been the outcomes of the last century of policies of a “we-choose-for-you” nature that were enacted in your best interest? Good economics does not lie in intention, only in outcome.

Good economics does not lie in intention, only in outcome.

You have a binary moral choice—a choice between freedom and slavery. A choice to allocate your own resources or give up your resources to be allocated by a bureaucrat, a tyrant, or a con artist. Be free. It’s a choice. All those who have achieved something have chosen to achieve it. Success is related to ability, and ability is related to right choices. There has never been an accidental achievement. One hundred percent of the people who do something, are one hundred percent of the people who choose to do something.

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Commit your works to the Lord; And your thoughts will be established. Proverbs 16:3