In a footnote to "Worker Safety" I mentioned that in many cases we have a tendency to accept one set of rules for individuals and another for those individuals viewed as a group. Not that it is a novel observation for me. I mentioned as early as "Those Other People" that we accept that "we", those individuals we know, are competent to run our own affairs, to plan for retirement, to behave ethically, and so on, but that those "other people", the great big aggregate of faceless humans, lack those abilities and need government supervisions. Similarly, in "Arrogance and Gun Control" I made a similar point about handguns, the fact that any individual would say they would not go on a mindless shooting spree if armed, nor would any individual they know, yet that they firmly believe that the faceless aggregate of humanity is not to be trusted with guns as they are prone to senseless violence. In each of these cases, as with so many others, individuals are viewed as being pretty much like us, mostly rational, capable of making sound decision, capable of learning from mistakes,and generally competent and capable of being trusted. On the other hand, the group, individuals lumped together into an anonymous mass, are incompetent, incapable of making decisions, knowing their wants, or learning from experience. Once we view them as a mass, we forget the traits we see in the individual members.

I won't go into the political implications of this, nor the philosophical, as that is the entire point of mt serial essay "Liberalism, Its Origins and Consequences", and anyone who wants to read my thoughts on those topics can begin with "Liberalism, Its Origins and Consequences - Preface". They are very significant topics, and ones on which I have spent quite a bit of time, but for the moment I want to look at something else, the way that this peculiar duality effects our understanding of economics.

The first, and most obvious, place where our economic understanding differentiates between the individual and the group is in our perception of the purpose of the economy. In our individual lives, the perspective is very simple and based on common sense. We recognize that we have desires, some based on survival, some based on other needs, and to satisfy those desires, we work. The purpose of labor is to satisfy those needs, and nothing more. Were we to be given all our wants, we would likely not work. Similarly, we trade because we are capable of giving up something less valuable for something more valuable, and that is possible because the other party values the goods differently, the result of which is that we both benefit from the trade. It is on this basis, the desire to satisfy our desires, that we judge our work and trades, our personal economy, as successful or unsuccessful. The more needs we satisfy, or the better we satisfy them, the more successful we are. Everything we do is aimed at the goal of satisfying our wants, and that is the measure of our success*.

But once we move to the aggregate, to "the economy", we seem to forget some or all of these truths. Or we imagine what applies to each individual in the economy somehow does not apply to them when seen as a group. For instance, many protectionist theories, as I described in "Clarfiying My Argument", reverse the relationship of work and spending, seeming to imagine we spend to allow us to work, rather than working so that we might consume. That no single individual thinks that way does not discourage them, they imagine the rules change when we deal with a group. Similarly, many seem to think the purpose of the economy is not to satisfy individual wants, but to provide something else, to fulfill some vaguely defined "needs" ("The Most Misleading Word"), or meet some other criteria. The problem is that every individual judges success based on exactly one thing, how well their desires are met. So if a system is successful for each individual based on their desires, then why would it be different for the group as a whole. That would be akin to judging baseball players on batting average, but judging the team's success on the ratio of height to weight. When a measure applies to every individual, it seems only common sense that it would apply to the group as well.

But, then again, if we applied individual measures to the group, we would find that much conventional wisdom would fail. ("Greed Versus Evil") After all, if individuals are mostly competent and can learn, then there is little excuse for interfering in the economy. Individuals can look after their own interest, adjust their affairs to match their own desires. imposing upon them a "one size fits all" solution developed by a distant bureaucrat would likely make things worse, not better. Likewise, in private life, we recognize that spending money we do not have, "borrowing" form our self to pay our self, and the other standard practices of Keynesian policies and managed currency, make no sense. Yet we imagine if we deal with the whole economy, instead of an individual, then the policy somehow makes total sense.

Perhaps the best example, however, is to be found in the idea that we "create jobs" by destroying wealth. For example, there was much talk during the struggle for "cap and trade" that mandating "green energy" would "create jobs" and make us richer. But if you apply this logic to your private life, you can see what nonsense it is. (See also "War Stimulates the Economy? Let's Nuke San Francisco!".) Suppose you were to try to get rich by burning your car. You would find you would have to do much more work to buy a replacement, that is you would "create work", but I doubt you would think that made you richer. And yet, when we do in the whole economy what amounts to the same thing, we are willing tom imagine that destroying wealth makes us rich by forcing us to work harder.

I suppose the list could go on, but the principle should be clear by now. What applies to an individual applies to the economy as a whole a well. Admittedly, there are situations where the greater number of actors make some small differences, but there is no place where principles change just because of numbers. An individual is an individual, whether alone or in a group. Their natures and behaviors do not change by being clumped together. And we would do well to remember that, as much of the nonsense that has been sold to us has been sold by precisely such distortions.

-------------------------------------------------------------------------

* Some will argue this ignores altruism, love of family or country, and all sorts of "higher" aspirations, but that is nonsense. Just because I describe desires as economic does not mean they are purely material or selfish desires. The wish to provide for my son and wife is a desire, and one which ranks above some other desires and below others. Similarly, all those "higher aspirations", be they religious, artistic or other, they also are desires we rank among all our other desires. It is the simplistic materialism, especially common to Marxism, that has led people to imagine that "higher" matters fall outside of economics. Economics deals with all human choices, so as long as you are making decisions, it is an economic matter. (See "Bad Economics Part 16".)

-------------------------------------------------------------------------

POSTSCRIPT

Some related errors can be found in "Protectionism", "Jobs, Jobs, Jobs, and More Jobs", "Free Trade, Employment, Outsourcing, and Protectionism" and "Fear of Trade".