BRAZIL-Things WILL get worse

The world in FRONT of the looking glass

A friend once said to me that if you treat a cold, you can “cure” it in just one week. If you do nottreat the cold it will take 7 full (and likely miserable) days for your body to cure it.

Another friend agreed that it is useless to try to cure a cold, but there is a cure for pneumonia. His conclusion was that if you let the common cold develop into pneumonia, you can then effect a cure.

The rigorous application of logic will support either approach. The conclusion depends on your acceptance or rejection of certain premises.

If you have ever tried to debate the issue of capitalism vs. communism with a reasonably intelligent leftist (there are a few of them; most under the age of 30!) the  clever leftist will destroy your arguments at the outset by rejecting your premise that the difference is even worth discussing.

This is the “problem” with the policies of the current administration. Dilma Rousseff has made it clear that she rejects the application of the “liberal” economic “model” in any way, shape, or form. Her concept of a “new economic framework” includes the rejection of what she defines as “liberal economics”.

The adjective “liberal” is both useless and redundant. Every society and/or decision-maker faces the same universal “economic problem”, i.e. that there is no such thing as a free lunch. Every economic choice involves an opportunity cost, which is nothing more than the cost of the same resource in an alternative use. 

Even what economists once called “free goods” such as sunshine, wind, the air we breathe, etc. have proven to be subject to the “economic problem”. The use of those resources are now shown to involve a cost.

Economics, in fact, is little more than the study and analysis of “constrained choice”. That’s one reason for calling it the “dismal science”. In an ideal world we would face no consequences, i.e. no price, for our decisions. Every lunch would be free. But on this side of the looking glass it doesn’t work that way. If you earn $100 per day and spend $102 per day, you will go broke. If you earn $1 million per day and spend $1 million and $2 per day you will also go broke. It will just take more time!

If you reject the “constraints” on your choices and reject the consequences (i.e. the feedback) you will simply court disaster.

As economist Herb Stein observed (and I have quoted before): “Things that cannot go on forever, don’t.” 

Continuing to try to fund programs like Bolsa Família (Dilma’s income maintenance program for Brazil’s poorest) can last only as long as the money. When other choices wind up drying up the funding available to the government, Bolsa Família  will be toast!

Such is the “cost” of insisting on living life in the world behind the looking glass!