Home
/
RELIGION & LIBERTY ONLINE
/
What Most People Get Wrong About Economics
What Most People Get Wrong About Economics
Jan 10, 2026 5:27 AM

I am not an economist. Truth be told, I only took one class in economics as an undergrad. However, I’ve learned a lot in the past few years, and one of the things I’ve learned is that most people don’t understand economics.

Pascal-Emmanuel Gobry knows this as well, and explains it far better than I could. In today’s Forbes, Gobry breaks down the understanding of economics into two broad camps: the “productivist” view and the “creativist.” First, the productivist:

pressed, theproductivist view of the economy holds that an economy works because it gives people stuff to do and stuff to buy. The reason why an economy which hums along hums along is because it produces enough stuff and people have enough money to buy that stuff so that people buy stuff and that gives jobs to the people who produce stuff, and in turn the stuff that is produced makes people want to buy them. To the productivists, the key thing is to keep the machine running and, hopefully, make it run faster, and more efficiently. But, fundamentally, what makes the economy run is this consumerist dynamic.

This, Gobry says, is the way most people – even economists – understand economics. It’s right in the short-term, but flawed. This viewpoint holds that economics is merely an endless cycle of buying and selling. As long as there is products are made, bought and sold, everything should be okay.

But it isn’t. And that’s why the productivist view is wrong.

What’s the other viewpoint? The creativist view:

In the long run, it is absolutely clear that what creates economic prosperity is human creativity. Economic models, which have almost no predictive ability as it is, are even more utterly useless here: it’s very easy to model a productivist economy, and probably impossible to model a creativist one, so guess what academic economists who want to publish papers with lots of equations do? If you look at the history of the Industrial Revolution, it is absolutely clear that what drove the Industrial Revolution was good old fashioned innovation: the pin factory; the steam engine; the mechanical loom; and so on. You can’t model that on a spreadsheet, but it’s the fundamental truth.

You see, economics is about people: what they do, how they do it, how they improve upon old ways of doing things. Instead of a cycle of buying and selling, economics is an endless array of human creativity and the drive to do and be more.

Now, the creativist es at a cost. You see, in the productivist way of thinking, one could simply keep making and selling the same things, for instance, electric fans to cool one’s house. Your fan wears out, and you buy a new one. That one breaks, and you purchase a new one, and so on.

But what happens when someone invents the air conditioner? More people start buying air conditioners and less fans. Some of the folks who make fans are going to lose their jobs, and those jobs e back. Now, we could pour government funds into fan factories to make sure those folks don’t lose their jobs, but is that really the solution? This loss of one type of work or industry for another is called creative destruction, and it isn’t pretty or easy. It is, however, necessary for economic growth. Fr. Robert Sirico, in his book Defending the Free Market: The Moral Case for a Free Economy, addresses this issue.

The challenge for all who are concerned with promoting a free and virtuous society is to minimize the damage done to people by the economy’s dynamism without suppressing that dynamism by wrapping business in a regulatory straitjacket. Sure, we could protect obsolete industries. But are you really protecting a person’s dignity by enticing him to continue making an obsolete product? How would you like to look back on ten or twenty years of labor and know that it wasn’t genuinely profitable but persisted only because your industry or business was on the public dole?

The problem goes beyond the loss of personal dignity. Every time resources are used to prop up an obsolete industry or pany, those are resources that cannot be used to fuel profitable and sustainable industries and businesses. The more resources an economy routes into inefficient and obsolete industries and businesses, the less economic growth there is for the economy as a whole. If labor and skills are not allowed to shift from sector to sector to find their most highly valued use, then economic stagnation is the inevitable result.

If economics were simply a matter of shifting money around, the productivist view would be fine. But economics is about people: their creativity, need to innovate, to have dignified work, to learn and grow, and not simply money. And that is what most people get wrong about economics.

Read “This Is The Fundamental Thing That Most People, Including Paul Krugman, Don’t Get AboutEconomics” at Forbes.

Comments
Welcome to mreligion comments! Please keep conversations courteous and on-topic. To fosterproductive and respectful conversations, you may see comments from our Community Managers.
Sign up to post
Sort by
Show More Comments
RELIGION & LIBERTY ONLINE
Do We Want Prices to Fool Us?
J.C. Penney recently gave up on last year’s strategy to abandon sales and coupons in favor of “everyday low pricing.” As an article in the New York Times points out, “simplifying pricing, it turns out, is not that simple”: “It may be a decent deal to buy that item for $5,” said Ms. Fobes, who runs Penny Pinchin’ Mom, a blog about couponing strategies. “But for someone like me, who’s always looking for a sale or a coupon — seeing...
Review: Fr. McCloskey on ‘Becoming Europe’
Fr C. John McCloskey, a Church historian and research fellow at the Faith and Reason Institute in Washington, recently reviewed Samuel Gregg’s ing Europe: Economic Decline, Culture, and How America Can Avoid a European Future. He says: Samuel Gregg, director of research at the Acton Institute in Grand Rapids, Mich., has written a very timely book, given the concerning state of our economy and, more importantly, our ever-declining moral life. … ing Europe opens with an account of the human...
School Vouchers Increase College Attendance for Black Students
New research suggests that school vouchers have a greater impact on whether black students attend college than small class sizes or effective teachers: Matthew M. Chingos of the Brookings Institution and Paul E. Peterson, director of Harvard’s program on education policy and governance, tracked college enrollment information for students who participated in the School Choice Scholarship program, which began in 1997. They were able to get college enrollment information on 2,637 of the 2,666 students in the original cohort. The...
Think (and Read) before You Blog: A Response to Michael Sean Winters
Over at the National Catholic Reporter, Michael Sean Winters makes ments about my book ing Europe based on a review he had read by Fr. C.J. McCloskey. Here are the most pertinent of his observations: I know that American exceptionalism lives on both the left and the right, but when did the right e so Europhobic? And why? National Catholic Register has a review of a new book by the Acton Institute’s Samuel Gregg entitled ing Europe: Economic Decline, Culture,...
Hostility Against Religion: It’s a Rising Tide
The Pew Forum on Religion & Public Life has been studying the steady rise of hostility towards religious expression and religious liberty worldwide. In fact, they found that restrictions on religion rose in every major area of the world, including the United States, since the study began in 2009. Citing what the Pew Forum calls “social hostilities” (as opposed to government hostilities), the study found that Pakistan, India and Iraq were the most hostile countries to religious freedom. The Social...
Hipsters and Elitists versus Chain Stores
New York City’s hipster and elitist class seem to believe that they should have some role in determining what business owners do with their property. Like hipsters and elitists around the country, New York’s cohort are banding together to panies that do not present the utopian vision for the neighbors where these elites dwell (most of whom are renters, by the way). There is much buzz in New York City right now because more and more national chains are setting...
Does the Media Need to Be Schooled in Religion?
Nobody can know everything about everything, but in the age of the internet, fact-checking isn’t too tough. It’s one thing for a high-school student to attempt to slide by on “facts” in a research paper for sophomore social studies, but another when professional journalists make errors about easily investigated pieces of knowledge. Lately, the media has been getting blasted for getting the facts wrong about religion. Carl M. Cannon: The upshot during Holy Week this year was a spate of...
Bitcoin as ‘Super Fiat’ Currency
Joe has done us all a real service in putting together his three part (1, 2, 3) primer on Bitcoin (full PDF here). I am curious, though, what the justification is for referring to Bitcoin as a modity” currency. Consider this from Izabella Kaminska at the FT Alphaville blog: For those who insist that the term “fiat” refers exclusively to government-issued fiat currency, it’s perhaps better to interpret our use in the evolutionary sense. Meaning that Bitcoin (and other virtual...
What Christians Should Know About Bitcoin (Part 3 of 3)
[Note: This is the third entry in a three part series. You can read the introductory posthereand part two here.] The Disadvantages of Bitcoin For people who are not obsessed with anonymity and are not waiting for the U.S. to return to the gold standard, the reasons for avoiding entering the Bitcoin market are numerous: 1. Convertibility – Whereas other currencies are convertible into other financial instruments (dollars to checks to certificates of deposit, etc.) and through numerous third-party services...
A Win-Win Solution: The Empirical Evidence on School Choice
A new report by Greg Forster of the Friedman Foundation finds that of all the “gold standard” research on children who utilize school vouchers, 11 of 12 studies conclude all or some of those students achieve better educational es. No study found choice participants were worse off than those remaining in traditional public schools: The evidence points clearly in one direction. Opponents frequently claim school choice does not benefit participants, hurts public schools, costs taxpayers, facilitates segregation, and even undermines...
Related Classification
Copyright 2023-2026 - www.mreligion.com All Rights Reserved