Better Children for Our World
First definition of Economics we see is “the study of how people allocate scarce resources.” The key here is “allocation” which implies a decision-making process and “scarce”, which implies a trade-off due to availability of finitely many resources (i.e. every unit of that resource that gets used is automatically unavailable there after).
Often when Economists model consumption decision-making process overtime, the time-horizon used is infinite. This seems to be contra censual, since no one lives forever. However, the assumption here is “humans don’t only care about their own welfare, but also for their offspring’s”, which is indeed a very reasonable assumption. As a matter of fact, if we have anything to consume today is only because someone before us had access to the very same resources (perhaps some more than we did), and valued enough our consumption on their own decision-making process to allow us resources (as scarce as they may be), to decide how to allocate. Therefore, our generation, like the many generations before us, holds in its hands the ability to endure or to finish our existence as a species. Sounds like an extrapolation, and also really scary, but it lies on the fundamental issues of our time. We are closest to the edge of availability of resources as humans have ever been. The way we decide to consume, to allocate, to use the available resources are ultimately going to determine the life-style of generations to come.
If you are reading this, you are probably thinking: sure, this is no news to me. We have world-wide conferences to talk about water shortage, carbon emissions, renewable energy sources vs. fossil fuels, etc. We have movies exploring this idea from every possible angle: Interstellar, 2012, The day After Tomorrow, etc. Every week you can get a different magazine talking about global warming, green house gases, nearly extinct species. We live in a world of overflowing information about the consequences of our actions, so I am pretty sure that lack of understanding isn’t the issue. The message has been coming across pretty clearly: We have a responsibility with the next generation to leave them enough resources to go on. Knowing all this, I do have one very important message that I don’t believe has been disseminated enough: We have a responsibility with the upcoming generations after our direct offspring to make them empathetic enough towards their own offspring to make decisions on their life-time that will allow upcoming generations to have resources.
The danger with this message I highlighted above is that it seems obvious. If we have what to consume today is because our past generations cared enough about us to leave this world as inheritance. It would be reasonable to assume future generations when faced with the same dilemma shall behave the same. I am not so confident. See, the same models in Economics I started the post with that consider an infinite time-horizon is all weighed in with parameters. The role of economists is to promote a framework to pursue an understanding of human behavior, but it doesn’t say how they should behave. Market economies don’t tell people how to behave, but rather set up a propagation mechanism for the actions chosen by economic agents that will ultimately affect each other, but no one imposes in any of them their payoff functions (preferences). It is ultimately the economic agents’ personal intents driving their actions that shall determine the future of our economy, of our society. Economists have models that show a potential for improving economic conditions through the presence of a government. However, if the chosen policy-makers act seeking their own benefits and not the common good, the governmental structure by itself won’t do any good towards society’s welfare (if anything it can be detrimental, and would be naïve to think otherwise).
I love Economics, and I love the way it allows me to perceive the world, people’s interactions, actions and consequences, incentives behind decisions, behavioral driving forces…but in a certain way, it has also allowed me to see the vulnerability of the equilibria generated by human nature. I refuse to give up on humanity, but with a drop of skepticism towards the optimism of those who think men are essentially good and narrow mind of many people who believe it is capitalism that has corrupted values. I can see the system for what it is, and I know capitalism isn’t anything but the arena of interaction of successive generations with weak moral values and payoffs driven by ulterior motives. In this sense, I fear tomorrow, and I believe the main goal isn’t leaving a better world for our children, but better children for our World.