Who is the world’s greatest economist? For just a little while, that would be me, James Quillian of Common Sense Economics. This situation will change as soon as just one smart person grasps some basic ideas and expands on them. It turns out that economics has failed to identify mankind’s most relevant and common transaction. A smart person will grab this principle and expand on it. Then there will be a new world’s greatest economist.
A bargaining process begins at birth. Baby starts trading freedom for comfort and continues doing the same thing until death. Economics assumes the autonomy of each individual. Certainly autonomy is possible for every person but the default mode is to bargain it away. Economic and political policies all assume individuals are freedom lovers. In our nation building endeavors the expectation is always that the natives will take liberty and run with it. There is great surprise when it doesn’t happen that way. People only do what comes natural. They bargain off their freedom time and time again because there are advantages in doing it that way. A better chance of surviving is one of them. A way to deal with the extreme stress of living is another.
So, what does it matter? It guarantees the failure of every macroeconomic model. It alters the nature of entire political systems. People are assumed to behave one way in the economy but their behavior is something else. The results of nation building efforts are confounding. The expectation is that when given liberty people will take freedom and run with it. They immediately begin trading freedom for comfort. Words like democracy and liberty are used to describe systems of self government but citizens expect leaders to act as messiahs. Being free translates into choosing one’s own master.
Self government breaks down because; leaders take office not to serve constituents but to further their own interests. What citizens expect and what they get are two different things. This is all human nature which takes thousands of years to change or improve upon.