Coherent Arbitrariness

The science of economics has taken giant steps in its development over the last 50 years. It has evolved from the socio-philosophical dreams of Rousseau and Marx, which could have been interpreted and improved upon by Freud, to Keynes’ interventionist methods. After Keynes’ discovery of how governments, by means of taxes, inflations, contractions, nationalizations and privatizations, could take from some to give to others, we stumbled upon “monetarists” like Milton Friedman who revived the countervailing wisdom of economic libertarians like von Hayek and Smith. Monetarists, who are rightly confident of the ability of any powerful group to get it all wrong, proved that governments should try to limit themselves to doing right. Doing right entails intervening as little as possible and letting competitors fight it out from time to time, letting the strongest prevail, until they are beaten by their own hubris or someone else. A process akin to having daily elections by consumers, with winners and losers sorting it out in the marketplace.

Today, the science of Economics has discovered that consumers act impulsively, and that their impulses follow a series of rules that are implanted, like tattoos on the arms of sailors, in the most hidden corridors of the brain. We are more “impulsive” than “rational,” and rationality only reaches us by means of punches and beatings. Despite all punishment, some people never grasp any form of rationality. First they develop the taste for punishment than the taste for wisdom and restrain.

One of the greatest discoveries of Behavioral Economics (the name given to this new economic revolution), is that the impulse to stand in line for anything that is free, a freebie, leads us to pay heavily for giveaways. Can you imagine Economists have just discovered what has been discovered by politicians since the first thirst for power appeared in human consciousness? “Please give me promises, not realities,” is a chant most politicians heed to. There is no country in the world in which a politician does not offer something for free, since they know that humans cannot resist freebies. The tragedy is that these freebies end up costing us more than caviar.

When something is missing in an economy it is because someone wants it for free and someone believes they can give it away. The only thing we can give away without any bad consequences is excellence in what we do. Giving away excellence ends up creating durable miracles among societies and human relations.

Anything they offer you for free in exchange for your vote has a cost for everyone that goes beyond what is predictable. Anything for free comes with a costly and deadly trap, and we almost always fall for it because we suffer from “coherent arbitrariness,” which always leads us to accept arbitrary situations and heroes because, those narcissistic, power hungry heroes know how to toss us a freebie.