To make good choices, you have to understand both the long-term consequences and the short-term consequences.
Here’s a transcript of our conversation:
Brittany: Hi, Emma.
Emma: Hi, Brittany.
Brittany: So we talked about in a recent episode, or at least a handful of them ago, cause and effect and how one thing always is going to lead to corresponding action. You can’t escape consequences even when the government thinks you can. So today, I wanna build on that a little bit by touching on another, what we call economic fallacy or economic, do you say economic or economic?
Emma: This is like, it honestly changes every time here.
Brittany: I’m like, there’s no like, standard. So I don’t know. Tell me what you say, kids. I wanna hear. So it’s another economic fallacy. Switch it up again. So it’s called the Short Run. So, think about the terms when your people say, well, in the long run, you know, which means like, well overall, you know, in the future and, you know, all the stuff. But people say in the short run, they’re very shortsighted. They’re only thinking about the immediate future. What, you know, what can be achieved in the short run? So they care only about today. They do not give a thought about tomorrow. So I wanna start by reading a quote from one of my favorite people, Henry Haslet. He wrote economics. And one lesson, he’s also, one reason I like him a lot is he wasn’t an economist, he was a writer who wrote about economics, which I am. So I’m like, Hey. And you know, we have the same initial normal last name. So we are basically the same person. Yeah. So, he wrote, I can’t even speak. The Bad Economist sees only what immediately strikes the eye. The Good Economist also looks beyond the bad economist and sees only the direct consequences of a proposed course. The Good Economist also looks at the longer and indirect consequences. So I’m gonna break this down a little bit. So the Bad Economist only sees what he can see. And Emma, I think you’re gonna touch on this in a minute. So, I’ll kick that to you in a second. So he can only see what is, happening right now. You know, the Good Economist is looking beyond that. What is this action? How is this gonna affect somebody in a couple of months? Or how is this person going to affect another person? So I’m actually, I want Emma, cuz I think you have a really good, Bastiat tie-in with this and I don’t wanna spoil it. So what does this quote mean to you?
Emma: Yeah, I think this is kind of going off of the idea, and I’m not sure if this is what he was referring to or not, but he really nailed it on the head. And I, also love Henry Haslet. I, Bastiat has this concept and he’s a famous French economist. He’s just a very, very bright guy that, we have to thank for a lot of really awesome economics theories that we rely on a lot day to day. but he has this idea of that which is seen and that which is not seen. And it’s a very fascinating thing and we could do a whole episode on just unpacking this, but basically, it’s the idea that there are consequences that we immediately see and that we immediately feel. And then there are those that are kind of under the surface and it’s the under-the-surface stuff that long term can really, really affect a lot of things in either a positive or a negative way. And it’s basically this idea that things are not always what they seem on the surface. And something that might seem like a really great idea in the short run economically. Like for example, giving people stimulus checks, that seemed like a really good idea in the short run. But then things that are unseen are, is like all of the money that they had to print to give those checks out, it was trillions of dollars, this huge, huge stimulus payment. And wow, a lot of people were like, I got 1400 bucks from the government, that’s awesome. I’ve been struggling to pay my rent. They didn’t know that, you know, Boeing and these giant air travel corporations got billions and billions of dollars. And it’s like, wow. Thomas Massey had this quote where he was talking about if they had taken all of the money in that bill, not saying this is a good idea, but just to kind of highlight it, if they’d taken all that money and actually only given it to families, I think everyone would’ve gotten somewhere around $50,000. So it’s like, what is seen is this little $1,400 little check that they give you, and then what’s unseen is how much more money is in that bill. And gosh, this can, you can look at this so many different ways with government, but we have to be thinking about the consequences. Like, I said, printing money. That’s a really long-term effect. And we’re starting to really feel that with inflation, everything is getting so expensive.
Brittany: I went grocery shopping or I’d do delivery, but like I was shocked. Heavy cream used to cost me like four. It’s always been expensive. I paid almost $7. Yeah. For a little a thing of heavy cream. And I’m just like, are you kidding me?
Emma: It’s crazy. Yeah. And it’s because for so long we’ve been printing this money with just reckless abandon and only a few people like Ron Paul, thankfully, and you know, all of our friends in the Liberty movement have been yelling about this for decades. And no one has really cared or listened. Nope. But now it’s like, wow, the chickens are coming home to root. I keep saying no but.
Brittany: I still don’t think they care. Is the, you’ve actually, I’ve actually seen, articles where it’s like, hey, maybe inflation’s a good thing. And you’re like, what
Emma: I saw this headline and it was like, inflation’s a good thing because you’re gonna get paid more. And I just died laughing. It’s silly. Yeah, it’s absurd. And I mean, it’s not even just economics, right? This could be stuff like eating bad foods and health. We’ve done a couple of episodes recently about looking after your health and why that’s important. you know, smoking is not good for you, and eating junk food all the time is not good for you. And you know, what is seen, or the surface effect might be, oh wow, this tastes really good and you’re happy for like 30 seconds, but then you don’t see, maybe there’s really bad ingredients in it that are harming your body. Or maybe it’s, you know, smoking does cause cancer. So that could be an unseen thing that eventually will make itself seen unfortunately.
Brittany: Yeah. And think just to cut in a little bit. Sorry. Yeah. Like, I think we need to remember how much of this isn’t just economics, right? Yeah. I think so much of, economics can be put into our regular life cost benefit, right? We talk about tradeoffs, all these incentives, all these things matter in the economy, but they also matter in our personal lives. And I think this podcast, if I can toot our own horn, we do a really good job at talking about the way the world works in history and economics and politically, but also how this plays out in everybody’s personal life. And I think you bring up a really good point with smoking or eating poorly, right? Yeah. All these things have consequences and we’ve kind of talked about consequences in one way or another and a lot and a lot of our episodes lately. But if you’re only looking at the short run, if you’re only looking for what is sometimes called instant gratification. Yeah. Then you’re thinking, okay, I wanna eat this entire pie. I’m making a pie after we record. So I’m very pie centric right now, if I eat this entire pie, it’s gonna feel really good in the moment because I love me some sugar and it’s gonna be great, but how am I gonna feel tomorrow? I’m probably gonna feel sluggish. I’m probably gonna feel, honestly sometimes maybe my pants won’t even button, right? Cause I’ll be in so much high, I’m gonna feel gross. I’m gonna feel, I’m probably gonna get a sugar rush and then a crash. So I’m not gonna feel good about that. Same with working out, right? Yeah. Like if I have to get up at five 30, walk in the cold and it’s really cold here in DC in the winter, and then, you know, give an hour of my time to lifting weights. like that does not sound fun in the moment. Like, it sounds better to me to just lay in bed and get that extra 15 minutes of sleep, but 15 minutes of sleep like, isn’t that much. Even like an hour No, isn’t a whole lot right? Yeah. So that instant gratification of sleeping that is great for the short run, but it’s not good for the long run. So this isn’t just economic, it’s not just, you know, policy. It’s in our personal life. If we don’t look at the big picture as they sometimes say, then we’re gonna harm ourselves.
Emma: Yeah. It’s so true. And even in the way that you carry yourself and your mindset too. Like, we’ve talked a lot about having healthy habits and one of those healthy habits is personal responsibility telling the truth. You know, it might feel good if you’ve made a mistake to cover it up and not tell anyone or blame it on something else or someone else. but the unseen consequences of that could be that your conscience is harmed. Right? if you’re constantly violating your conscience by telling lies, there will be long-term problems from that. And we talked about this in a recent episode, I’ll link it in the show notes. But there’s consequences from lying where you actually start to lie to yourself. And that’s an unseen consequence. So like Brittany said, this is not just an economic thing, it’s also in your personal life, in your health, in your habits. And, you know, I think it’s important for us to, you know, we all try to hopefully take responsibility for ourselves and think about consequences before we act. That’s a great habit to be in. And I think most of us probably listening to this show do a pretty good job of that. But, you know, if we’re doing that ourselves, we’ve gotta be expecting that from the people leading our country. It’s very important that, you know, hey, if you’re not going to eat junk food and because you’re, you know that it’s gonna make you feel badly, why are we letting the government subsidize junk food? Yes. You know, these things go all the way up to the top. And if you have a conviction about something in your personal life, not saying that we need the government to be the morality police, but you know, the government does subsidize and does have a hand in a lot of things that have negative consequences and things that affect us personally. So, it’s an interesting topic because it can really touch on so many different things that affect us in our daily lives.
Brittany: Yeah, that’s right. And you know, my closing thought before I kick it back to you would just be when you’re faced with any problem or any decision, think about, okay, how is this going to affect me in the short run. But how is this going to affect me later on? How am I going to maybe, you know, not benefit from it, but actually, you know, my, be punished for my own actions? See the consequences come through. So be really thoughtful about that when you make decisions.
Emma: Yes, I totally agree. I second that. Always think through what is seen and what is unseen. Yes. And Bastiat will be proud of you. So thank you for listening guys, and we will talk to you all again very soon.
Brittany: Talk to you soon.