Banking & Finance and Economic Analysis

This election, take note of 'opportunity cost'

October 30, 2010

The first concept taught in every introductory economics class is the simple idea of “opportunity cost.” This is the straightforward notion that the cost of an item is measured by what you give up to get it.

I think it is an idea that separates those who make decisions from those who want to talk about them and, in application, is an idea that distinguishes serious from unserious people. As an economist, and more important a citizen-soldier, father and taxpayer, the one thing I am looking for in this election is men and women who understand the idea of “opportunity cost.”

In the coming years, we face a set of difficult policy decisions. A delay in these decisions robs the best alternatives from us all. In truth, a good many matters at issue in this election cycle are not yet really a crisis. The federal budget, energy dependency, health care and Social Security can be fixed now without life-altering sacrifice. Left unchecked, the options narrow, the necessary sacrifice grows and the future dims. They are, however, a brewing crisis. As this happens, many (on both the right and left) entirely miss the point.

One aspiring presidential candidate on the right proclaims that the nation’s problems are a “moral crisis, not a money crisis.” True, perhaps, but I neither need nor want a president to help me raise my kids, improve my marriage, or choose my church. No matter how bad I am at these, no denizen of the White House is going to do better. I want something far more from my president than helping me with my kid’s baseball practice, violin lessons and evening prayers. I want a president who will keep us free and unburden my children from debt. Mrs. Hicks and I, our family, neighbors and friends will attend to the rest.

The left is no better. We fight difficult wars in a half-dozen countries, yet the sticking point in this year’s defense budget was repeal of “Don’t Ask, Don’t Tell.” Call me crazy, but caring for soldiers is more about buying body armor and ammunition than easing an open discussion of their sexuality. For the record, and this is a potentially costly admission since I remain a serving reserve officer, I believe we should repeal “Don’t Ask, Don’t Tell.” But we must wait until we have emerged with honor from our current wars; until then, the opportunity cost of debating it is just too high.

As they have reminded us frequently these past years, the current Congress and administration came to office with many challenges not of their making. Yet, the heaping of enormous uncertainty onto recession made matters far, far worse. As a consequence, this election will see many good folks lose their jobs in Congress simply because they followed a leadership with no sense of priorities. Still, this election will send a clear signal of priorities. And I, like many Americans, will be voting for folks who understand the simple economic concept of “opportunity cost.”•

__________

Hicks is director of the Center for Business and Economic Research at Ball State University. His column appears weekly. He can be reached at cber@bsu.edu.

ADVERTISEMENT

Recent Articles by Mike Hicks

Comments powered by Disqus