I’ve been reading a lot about economics lately. It’s hard to avoid. Economics, as we’ve all learned, isn’t just about money. It’s about human behavior. These days, the economics we read about tends to be about human behavior that has bad consequences. Economists have come up with some interesting terms to describe human economic behavior, and I’ll describe just a few.
The best known is the tragedy of the commons: Many people use a common resource, and if each one uses it to their personal best advantage, the resource is eventually destroyed. The name comes from farmers grazing their animals in a common field; as each farmer adds one more cow, and then another one, and so on, eventually the field is overgrazed and no one can use it. The tragedy of the commons is why we have air pollution and water pollution, global warming and giant islands of plastic garbage floating in the ocean.
Then there’s the notion of negative externalities. This is when economic activity hurts someone who isn’t directly involved. For example, the pollution from my factory gives you asthma. Another example is when complex trades among corporations cause otherwise successful businesses to fire their workers.
The last one is rational irrationality. This is when an economic system is set up so that if each person acts from rational self-interest, the combined effect is disastrous. For example, a system which rewards the buying of massive quantities of risky debt brings on its own failure.
The standard explanation of why these things cause trouble is that they are short-sighted: They consider only short-term gain, and not long-term losses. As anyone who remembers The Lorax can tell you, there’s a lot of truth to this.
But I think the real problem goes deeper than this. It’s not just that we’re short-sighted, it’s that we don’t understand our relationship to other beings in this universe. Each of those farmers grazing cows on the commons thinks of herself as separate from all the other farmers. They don’t see themselves as a community needing to come to decisions as a community.
Similarly, the factory owner whose pollution gives you asthma doesn’t fully comprehend what he’s doing to you, and even if he did, wouldn’t see what happens to you as his responsibility.
And the traders betting on one side or the other of mortgage-based securities based on loans that never should have been made are dealing in abstractions. They don’t make the connection between what they are doing and the lives of real people with real homes.
It’s as if the fingers on a hand started competing with each other, not understanding that they are, in fact, intimately connected. After Cain murdered Abel, he said to God, “Am I my brother’s keeper?” The conventional answer is: yes, you are your brother’s keeper. But the deeper answer is: you and your brother are not two independent beings. Nothing in this universe is truly separate from you. This is not a statement about mystic bliss. It is a moral imperative.