America drops its golden eggs into the Iraqi desert. ©2006 UrbisMedia
A humorous and somewhat arrogant radio personality who calls himself “Dr. Science” claims that he “know[s] more than you do” because he has “a masters degree . . . in Science.” It is a tongue-in-cheek send-up of people who use their academic credentials to claim authority. In the “hard” and “natural” sciences such claims may have some validity and effect; in social science, which relates to everyday affairs with which we all have “some experience,” that is less the case. We all claim to know a lot more psychology than, say, quantum physics.
But today I will be “Dr. E-con,” because I have a bachelor’s degree in Economics . [1] I won’t get into such arcane and potentially intimidating stuff as “input-output analysis,” “the marginal propensity to consume” and, one of my favorites, the “backward bending labor supply curve,” because I don’t wish to add to Carlisle’s dictum that economics is “the dismal science” that it can also be the soporific science. I just want to take this opportunity to say a few words about “opportunity costs.” That’s partly because “opportunity costs” are a fairly easy (and I’m not sure I fully understand those other ones, anyway).
So, opportunity costs. We all deal with this concept, almost reflexively it seems, on a daily basis. Simply put, when you buy a Starbucks super double tall decaf hazelnut soy latte con panna you forgo the opportunity to spend that same amount of money for a new set of tires for your car. You spent the money on the coffee. Now I realize that, if you are a typical American, you say,” What the hell, I’ll get out the ole magique plastique, get the tires, too, and have another latte on the way home.” So what, if the Bush administration can run our government with that sort of economic attitude, then why shouldn’t the rest of us behave like that.
But that’s not the way the concept of opportunity costs operates—you spend your money of one thing and, incontrovertably, that money is not available to spend on something else. No way, Jose. There are more consequences to spending decisions than that.
Hey, wake up! I haven’t gotten to the sleep-inducing stuff yet!
There can be what I call a “double-whammy” to opportunity costs, because it relates also towhat you your money on. For example, the Bush administration is asking congress this week for another $91 Billion for the Iraq war that is already costing us $256,349,835,991 . . . no wait, $256,349,841,491 . . . no wait, $256,352,840,991 . . . the hell with it, it’s going up at about $2,800 per second! If they give it to him that $91 Billion [2] it will not be around to use for other things, like finding cures for cancer, heart disease, multiple sclerosis, diabetes, malaria, etc., for education, for public infrastructure, for scientific development (like alternatives for fossil fuels) . . . need I go on. No, that $91 Billion will be squandered as America drops its golden eggs of opportunity into the Iraqi sands. [3]
OK, so it depends on whether you think that finding a cure for cystic fibrosis is more important that blasting some Iraqi kid to particles of DNA, or making our military people targets for “insurgent” road side bomb builders, or filling the pockets of a bunch of American war profiteers. And I don’t want to hear any bullshit about this being necessary expenditures this money to avenge 911 or pursue the “war on terror,” or that real thigh-slapper, “keeping America safe.”
These values make a difference as to whether we get, or forego, a positive double-whammy.[4] When we spend our public funds on infrastructure and medical and scientific research and education we get a society that works better and more efficiently, in which people live healthier and more safely, in which new jobs are created from our research and are performed by better-educated workers. They, in turn, contribute to our society with their productivity, and they are less of a drag because of health, economic and other problems. We advance and improve.
But that’s just the domestic advantage. Consider the goodwill and amicable international relations when our advances in science, medicine and technology are shared and reduce pain, poverty and disease and destitution in other nations. [5] Does this sound rather “goody-goody,” at odds with the picture of a bunch of terrorist infidels, and failed states and dictators and commies out there undeserving of our largesse? No, there will still be dictators and rogue states around, but we won’t be contesting them alone, or with purchased “coalitions.”
So write your congressman and tell him or her to vote lustily of that $91 Billion Iraq war supplemental appropriation and the rest of them that are likely to follow. Vote for ouropportunity to make a positive difference at home and overseas, not squandered in the desert, in exploded Iraqi and American bodies, vote for the tens of thousands of tanks and humvees, and fighting vehicles that will rust in the Iraqi sands, and repairs of Iraqi infrastructure that we blew up in the first place and allowed to be looted. Vote against the inflation that is already creeping up, the war debt that approaches a half $Trillion, and the higher fuel costs and the higher profits for defense contractors and war profiteers. Vote agains t a failed administration and a failed golden opportunity.
Opportunity Cost is a concept that is non-ideological. It doesn’t matter whether you are a Democrat, Republican, liberal or conservative, whatever; you spend it on one thing and you don’t have it to do another. It’s another way of say that and expenditure has a “trade-off.” While economists tends to monetize opportunity costs, they don’t all come that way. To spend time doing one thing, it is no longer available to devote to something else. If you spendresources on one things, like getting fathers and husbands (and mother and wives) killed or disabled, it is a negative double whammy opportunity cost because they are no longer available to earn incomes, but their loss of earning power must be compensated for with additional public expenditure.
Hey you! Yeah, you . Pay attention! This is the dismal science, but I’m almost through here.
OK, I’m not going into a bunch of stuff that makes opportunity costs a bit more complicated, stuff like marginality, diminishing returns, shadow prices and differential multipliers —after all I am “Dr. Econ,” and you’re not. [6] But none of it invalidates the basic concept of opportunity cost, one that even a guy who got into Yale (on the family name) and was a C student ought to have been able to understand. But then opportunity costs are different for someone who knows there’s a daddy and his friends there to give you a brand new opportunity when you make the wrong choice and screw up. Opportunity Costs are just a calculus; knowing what they are doesn’t confer on us what is called the normative dimension of choice—the morality and intelligence to make a rational choice and a good choice. Put another way: opportunity costs are no guarantee against stupidity.
Ponder that for a while over a Starbucks super double tall decaf hazelnut soy latte con panna. On second thought, don’t make that a decaf; there’ll be a quiz on this stuff next week.
___________________________________
©2006, James A. Clapp (UrbisMedia Ltd. Pub. 3.16.2006)
[1] I do; LeMoyne College, class of 1962. Alas, no cum laude with that degree, more like acum fortuna .
[2] Or, 166, 500, 000 Starbucks super double tall decaf hazelnut soy lattes con panna , if that gives you a better idea
[3] Yes, I am aware that a good chunk of this will find its way back into the bank accounts of executives of Halliburton, and the other American contractors and Bush contributors. That’s part of the plan!
[4] This is not a real economic term,
[5] I am aware that the usual cohort of greedy bastards would have to be kept under control, like Big Pharm and the Halliburtons and other corporations who have been the biggest recipients of what we call “foreign aid.”
[6] Excepting you, of course, Dr. Yu.