Home
/
RELIGION & LIBERTY ONLINE
/
What Most People Get Wrong About Economics
What Most People Get Wrong About Economics
Jan 29, 2026 7:20 PM

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
Why Christians Should Be Cultural Entrepreneurs
“Christianity can and should be a leading influence in human culture,” says Greg Forster, “We do this not by seizing control of the institutions of culture and imposing Christianity on people by force, but by acting as cultural entrepreneurs.” A prime example of a cultural entrepreneur in the Bible, notes Forster, was Job: Job was a cultural leader because he served human needs. The connection is reinforced in the following verses, where Job seamlessly transitions back from his deeds of...
Free Ebook: Catholicism, Ecology And The Environment
Acton’s newest monograph, Catholicism, Ecology, and the Environment: A Bishop’s Reflection, is now available as a free ebook download until Monday, February 17. The book, with a foreword from Acton’s Director of Research, Sam Gregg, is authored byBishop Dominique Rey. Bishop Rey graduated with a degree in economics at Lyon and obtained a PhD in fiscal policy at Clermont–Ferrand. He served France as a financial inspector in the Ministry of Finance between 1976 and 1979. Bishop Rey earned a degree...
Survey: What Do You Look for in a Pastor?
Finding the right pastor or priest for a congregation can be a trying ordeal. It is stressful for the candidates, stressful mittees, stressful for elders and bishops (where applicable). In some cases, qualified ministers have no church, and churches have no permanent minister. What accounts for the disconnect between what sort of candidates are vying for churches and the sort for which churches are actually looking? In economic terms, why is there seemingly a dissonance between supply (ministers) and demand...
We Don’t Have a Poverty Problem, We Have a Dependency Problem
“There is no material poverty in the U.S.,” says the always-provocative Walter E. Williams. “What we have in our nation are dependency and poverty of the spirit, with people making unwise choices and leading pathological lives aided and abetted by the welfare state.” The Census Bureau pegs the poverty rate among blacks at 35 percent and among whites at 13 percent. The illegitimacy rate among blacks is 72 percent, and among whites it’s 30 percent. A statistic that one doesn’t...
‘Defiant’ Portrays Heroism on Every Page
In an age where words like “courage” and “bravery” are often tossed about casually, a new book captures the immense heroism and resolve of 11 American POWs during the war in Vietnam. Alvin Townley closes his new book Defiant with these words, “Together, they overcame more intense hardship over more years than any other group of servicemen and families in American history. We should not forget.” Townley easily makes that case by telling their stories and expanding on previous accounts...
What Liberal Evangelicals Should Know About the Economic Views of Conservative Evangelicals (Part 4)
Why do liberal and conservative evangelicals tend to disagree so often about economic issues? This is the fourth in a series of posts that addresses that question by examining 12 principles that generally drive the thinking of conservative evangelicals when es to economics. The first in the series can be foundhere;Part 2 can be foundhere; and Part 3 can be found here.A PDF/text version of the entire series can be foundhere. 9. Social mobility — specifically getting people out of...
Rev. Sirico In California: Is The People’s Pope An Anti-Capitalist?
Rev. Robert Sirico Catholics@Work in Danville, Calif. is pleased to present Fr. Robert Sirico, the President of the Acton Institute, as their guest speaker at the March 11, 2014 breakfast forum. Rev. Sirico will be speaking about Pope Francis and his recent apostolic letter, Evangelii Gaudium, and the issue of poverty. John Duncan, president of Catholics@Work, says, After listening to and reading articles by Fr. Sirico on this subject it seems to me that there are two dimensions we must...
Liberating Our Labor
“I don’t build in order to have clients. I have clients in order to build!” At SlateMiya Tokumitsu writes that the motto “Do What You Love” really functions as a kind of capitalism-supporting opiate: “In masking the very exploitative mechanisms of labor that it fuels, DWYL is, in fact, the most perfect ideological tool of capitalism.” While Tokumitsu singles out Steve Jobs, perhaps Howard Roark might agree. If that’s true (and it is more than debatable), then this Think Progress...
Beyond Humanitarianism: Staying ‘Mission True’ in a Culture of Drift
Peter Greer recently wrote a book about thespiritual danger of doing good, encouraging Christians to deal closely with matters of the heart before putting their hands to work. “Our service is downstream from the Gospel message,” he said in an interview here on the blog. “If we forget this, it’s just a matter of time before we self-destruct.” Just a year later, writing alongside co-author Chris Horst, he’s released another book, Mission Drift—this time focusing on the spiritual risks faced...
Science, Faith, and Our Place in The Universe
In Acton’s newly published monograph, Catholicism, Ecology, and the Environment, Bishop Dominique Rey explores the relationship between man and the created world. In the book’s foreword, written by Acton’s Director of Research Sam Gregg, Gregg summarizes the Catholic view of man’s relationship to created matter: Man is understood as intrinsically superior to the natural world. He is charged with dominion over it in order that it may be used to promote integral human development. However, man’s dominion is not absolute....
Related Classification
Copyright 2023-2026 - www.mreligion.com All Rights Reserved