When it comes to law and public policy, economics is, in fact everything. Many people fail to go beyond the typical, incorrect notion that economics is just about money, banking, finance and production. Despite what politicians, pundits and ‘public thinkers’ have to say, real economics is the study of how humans deal with the problem of scarcity; in other words how humans allocate and use scarce resources.
People fail to realise that economics encompasses every aspect of human life. Every action, every choice that humans make has to do with the allocation of scarce resources. Likewise, all human actions incur an opportunity cost. If Jim Bob commits action A, then Jim Bob loses to chance to commit action B; thus the cost of action A is the value placed on action B. Opportunity cost is summed up as the value placed on the next best option. Since Jim Bob is a rational being, he chooses the action that he believes will give him the most utility (satisfaction); this implies that Jim Bob places more value upon option A than option B.
All of this of course implies an eventual goal in human action. The goal of all human action is profit. Profit not in terms of money, but utility (satisfaction). In other words, the reason Jim Bob chooses A over B (as stated) is that Jim Bob believes he will eventually obtain more satisfaction from option A. Utility, then, is the standard used by individuals is decision making. Thus the hopeful goal of all human action is the eventual gaining of satisfaction from said action.
Satisfaction is the reason businesses are created, the reason businesses survive or fail, the reason loans are approved or declined; gaining satisfaction is the goal of all human action.
Dear Mr. Esq.
I was doing a Google search on my name when I found your article. Do you ever Google your own name? I do it every week to see what I’ve been doing, where I’ve been and see how popular I’m becoming.
Mr. Esq. you’ve accused me of something that I didn’t do. How could you accuse me of committing action A? You don’t even know me and you don’t know where I was when action A was committed. If you can tell me when and where action A was committed, I can come up with an alibi because I know a lot of people that can vouch for me and testify that I wasn’t at that place and at that time when action A was committed. Besides, as you stated, I am a rational being, so you have to agree that at the time and at the place that action A was being committed, a rational being would be totally engrossed in committing action B. So therefore, you have no grounds to accuse me of committing action A because in your own words, Jim Bob is a rational being and we all know that rational beings would always choose action B over action A (unless action C is better).
By: Jim Bob Johnson on September 25, 2009
at 11:23 pm