Thoughts, essays, and writings on Liberty. Written by the heirs of Patrick Henry.

“Democracy is based on the assumption that a million men are wiser than one man. How's that again? I missed something. Autocracy is based on the assumption that one man is wiser than a million men. Let's play that over again too. Who decides?”     Robert A. Heinlein

September 7, 2007

Everything is Economics

by Chris

I’ve said this many times before: economics isn’t the study of money; it’s the study of incentives, choices, and consequences.

In this video from the TED conference, economist Emily Oster performs an economic analysis of the spread of AIDS in Africa and shows once again, it’s about the economics (which means it’s about peoples choices and incentives):

What is abundantly clear here, is that government aid does little or nothing to combat AIDS; but choice, and incentives do a hell of a lot.

This is one of the fundamental principles of libertarianism in action. Rational actors, making rational, self interested choices.

Now, here’s another TED conference video, but this one you may have heard of before; it’s Andrew Mwendas speech about how foreign aid has actually HURT Africa.

Mwendas central point (though the language he uses may be a little to the left of the way I would put it) is that foreign aid has hurt Africa, because it has isolated the people from market driven incentives and consequences; and has in fact created perverse incentives towards greater poverty, and policies which HURT the people and economis of the continent. This is because more poverty means more aid, which means less attempts (and less success) at breaking out of poverty, ad infinitum (the perverse incentive).

Everything is economics, really.

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2 Comments

  1. Chris,

    Well put. So many people make the mistake of thinking economics is just about money, when in fact it’s really about human motivation and interaction. Good post.

    Comment by UCrawford — September 7, 2007 @ 6:50 pm
  2. I can’t percieve of the naivenees of equating economics with changing cultural behavior and mythology. The choice for the woman to say no, that can be life threatening, and to get men to use condoms or to be able to depend on condoms as quality products. Once again this perfect world where your beliefs solves everything, when daily families are dying from AIDS and she giving a lecture on some research, getting praise for equisite thinking. AIDS encompasses more than poverty. I know many of ya’ll still believe you are not at risk here in the US. Once that threshold for the number of new cases, for the disease to become an epidemic, you will see that AIDS is not a disease of the poor, homosexual or drug user communitity, and African women are not any different than any other women in this regard.

    Comment by VRB — September 12, 2007 @ 10:54 am

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