The OLD Philosopher – John M. Miller
Economics is often called “the dismal science.” It attains that negative description for two basic reasons. First, economists usually see far more dark clouds than sunshine in their predictions regarding the economy, and second, there are so many varied factors that effect the economy that it is impossible to keep it on a steady upward course.
For example, Ukraine is a major exporter of wheat and other grains to Europe and Africa. But when Russia makes an unprovoked invasion of Ukraine and prevents ships from transporting grain out of the Black Sea, some nations experience food shortages, and the price of wheat skyrockets because of the shortage. When Islamist militants in Yemen fire missiles and drones at oil tankers in the Red Sea, the price of oil rises almost instantaneously. If the bankers in the Federal Reserve raise or lower interest rates, it has a direct bearing on economic contraction or expansion.
Citizens expect politicians to take measures to offset the inevitable hiccups or outright eruptions that occur in the economy, but often politicians are powerless to do so. When the economy is strong, the party in power has an advantage at the polls, but when it is weak, or is perceived to be weak, voters may hold the economic doldrums against the politicians in power. This happens whichever party controls Congress.
Inflation is a case in point. Can Congress force prices to drop? Can economists do that? Corporations do not like inflation, but when it comes, they are the least likely economic factor to volunteer to drop their prices. Consumers are at the mercy of economics.
Deflation occurs infrequently, but when it does, its consequences can be long-lasting. Japan has battled deflation for over thirty years. China is starting to feel deflationary pressures. When the value of a nation’s currency plummets, its economy is sure to fall as well. Economic trends may take a long time to manifest themselves, but when they do, economies either soar or decline.
Free trade has been the normal pattern of the world for many years. Now, however, tariffs are starting to be tacked onto the price of goods imported from other countries. If a nation has a large consumer base, producers in that country are happy with tariffs, because their goods are cheaper. Consumers who have been used to low prices on everything from everywhere become testy when tariffs raise prices on many of their favorite products. Producers seek the highest prices for their products, while consumers seek the lowest prices.
Economics is always in the unenviable position of trying to satisfy as many people as possible. That percentage inevitably goes up and down with economic ups and downs. Politicians think legislation can improve economics. Often it has no effect or even disrupts economics. Economics is extremely complicated. Little wonder, then, it is called “the dismal science.” We may not understand its effects on us, but like Old Man River, it just keeps rolling along. – April 13, 2024
John Miller is Pastor of The Chapel Without Walls on Hilton Head Island, SC. More of his writings may be viewed at www.chapelwithoutwalls.org.