We seem to be turning nearly every aspect of life into a competition in which somebody must win and somebody must lose. Economics is all about competition, and the way we talk about it now emphasizes winners and losers. This country is taking away our export markets, this country is taking away our jobs, this country is attracting investment that we should get, and these countries immigrants are displacing our workers.
Workers get lower wages so that the shareholders can take higher profits, and consumers pay higher prices so that innovators and entrepreneurs can be rewarded. Taxpayers fork over more so that retirees, students and the unemployed can live more easily. I win; you lose. Economics is all about competition, but putting everything in terms of winners and losers gets it fundamentally wrong.
So the rule became, Rules do not matter. After that came the savings and loan scandals, the the Enron scandal, the Wall Street scandal, the insider trading scandals and finally the great financial collapse of 2007 and 2008, which uncovered much more scandalous behavior in the finance and real estate sectors.
The great idea that economics has contributed to Human progress went like this: If each of us specializes in what we do comparatively well, and then we trade that work for the other things we need, the total amount of goods and services available to us grows, and we can all be better off. Once more for emphasis: If we specialize and trade with each other, we can all be better off. No winners and losers. We all can win.
How do we make this economy work again? We have to go back to basics. The economy works best when the gains from specialization and exchange are divided more or less evenly between buyers and sellers. Prices should reflect costs, including opportunity costs but should not be arbitrary or exorbitant. We should reward talent, skill, knowledge, judgment, patience, foresight, thrift and hard work. We should not reward power and greed.
Some of the poorest people in the World are quite self-sufficient. Farmers in tropical parts of the World raise their own food, build their own homes, make their own clothes and educate their own children. They are incredibly knowledgeable, resourceful and industrious, but they are very poor. Maybe I could summarize this for you in this way
Love God above all, and love your neighbor as you love yourself. Do unto others as you would have them do unto you. This is a basic teaching of all the World’s great religions. It is the key to godliness, happiness and peace.