Home
/
RELIGION & LIBERTY ONLINE
/
What Most People Get Wrong About Economics
What Most People Get Wrong About Economics
Jan 28, 2026 4:50 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
The intangibles of progress: Has the economy actually improved since 1973?
In assessing the health of our economy, many have been quick to proclaim the worst, whether pointing to flatlining wages or a supposedly static quality of life. Economic progress has halted, they say; thus, something must be terribly amiss with modern-day capitalism. “If you were born in 1973, the median wage went from $17 to $19 an hour in your lifetime,” wrote Sen. Bernie Sanders in a recent tweet. “…The top 1%’s annual e tripled: $480K to $1.45 million. That’s...
Video: Robert Doar on poverty in America
In July of this year, Robert Doar officially took the reins as President of the American Enterprise Institute, succeeding friend of Acton Arthur C. Brooks in that role. Yesterday, we were pleased to e Doar to deliver an address on poverty in America as part of the 2019 Acton Lecture Series. Doar reviewed the history of welfare reform during and after the Clinton Administration, discussed what works and what doesn’t when trying to help those in poverty to rise toward...
What Margaret Thatcher’s rabbi taught about work, welfare, and labor unions
Margaret Thatcher transformed the UK’s stagnant economy with a program of privatization and paring back the welfare state. This won her a savage attack from the Church of England – and a defense from the chief rabbi, who emphasized the religious and moral value of work and responsibility. Thatcher came to office 40 years ago this May. Despite the rebounding economy, Thatcher’s Conservative Party faced the same critique that Frédéric Bastiat detailed in The Law: “Socialism, like the ancient ideas...
Joe Biden: Youth idol?
Today at Spectator USA I write about Joe Biden’s forgotten status as a fount of youthful genius in “Joe Biden: victim of the cult of youth.” Biden won his first Senate election at the 29, the same age as Alexandria Ocasio-Cortez, and spent the next two decades being extolled for his age and sophistication – before spending the last decade ridiculed for his age and mediocrity. Biden’s fate is a cautionary tale about a culture that exalts youth and passion...
‘Belief in Genesis 1:27’ is ‘incompatible with human dignity’: Court
Human dignity, the defining value of the West, grows out of the Judeo-Christian belief that the human race was created in the image of God. However, a British court has officially pronounced this truth, revealed in the opening chapter of the Bible, patible with human dignity.” The case involved Dr. David Mackereth, who worked as a disability assessor for the Department for Work and Pensions (DWP). During an early evaluation meeting, a manager asked the 56-year-old Christian whether he would...
Creativity, history, and entrepreneurship
Joseph Sunde recently posted a substantive introduction to and elaboration of a paper I co-authored with Victor Claar, “Creativity, innovation, and the historicity of entrepreneurship,” in the Journal of Entrepreneurship & Public Policy. The idea for this paper arose out of reflection on a previous article I wrote with Victor, “The Soul of the Entrepeneur: A Christian Anthropology of Creativity, Innovation, and Liberty,” in the Journal of Ethics & Entrepreneurship. In that earlier piece, we discussed the “creativity” and “innovation,”...
Acton Line podcast special report: Churches and ministries at the front line of the opioid crisis
In 2017, a poll from NPR and Ipsos found that one in every three people in the U.S. has been affected by the opioid crisis in one way or another. One third of Americans know someone who has overdosed or know someone who is battling addiction — and the crisis hasn’t slowed down. On this episode, AnneMarie Schieber, award winning television news anchor and reporter based in Grand Rapids, MI, dives into the issue and explores how the private sector...
NBA abandons Hong Kong for Communist rule
In this week’s Acton Commentary I discuss the raging controversy between the National Basketball Association, Houston Rockets general manager Daryl Morey, and China. Morey’s since deleted tweet expressing solidarity for the protest movement in Hong Kong led to criticism from the the Chinese regime, Chinese firms which sponsor the NBA, and NBA team owners. This led the NBA to distance itself from Morey and his views: The NBA is now reaping the whirlwind of its failure to heed this warning...
Rule of law crumbles — again — in Latin America
It’s no secret that most of Latin America has struggled for a long time with the idea, habits, and practices of rule of law. When one consults rankings such as the Heritage Foundation’s Index of Economic Freedom (which measures for rule of law), it’s a depressing picture, despite notable exceptions like Chile. There are many reasons for this. Among others, they include a deep long-standing distrust of formal institutions which pervades many Latin American societies as well as the fact...
How to make a bad argument about wealth and poverty
When es to the morality of wealth and economics, bad arguments are so pervasive that no one needs to teach people how to make them. Yet sometimes it’s useful to examine logical errors in order to avoid making them in the future. One example occurred in today’s issue of The Observer, the student-run newspaper of the University of Notre Dame. The author, Mary Szromba, clearly felt passionate about her argument that “you cannot call yourself a Christian if you are...
Related Classification
Copyright 2023-2026 - www.mreligion.com All Rights Reserved