A collection of tools

Dr Rachel Hodder
Insights Newsletter
23 September, 2016

Departing MP Kevin Hague’s valedictory speech this week offered us this astute insight: "The economy is not some force of nature. It is a collection of tools that we can re-engineer to help us meet social goals."

It is such a shame so few politicians view the economy in this way.

Indeed, the economy is not a force of nature. Forces of nature obey the laws of physics.

Instead, the economy is the combined forces of millions of people making hundreds of individual and group decisions each day at the mercy of unique desires, needs, and aspirations. There is no reason to think people would resist these forces being ‘re-engineered’. Of course they can’t be trusted to pursue the right social goals.

Achieving social goals through the economy is simply a matter of treating it like an engineering problem. Human desires, property rights, these are just pesky obstacles to the perfect design of society. Surely, no sane person would object to the grand design of our elected superiors.

Engineers are great masters of figuring out how to overcome the forces of nature to construct incredible designs. Surely, the forces of human decision making are just as easy to predict and control. If only we could get more engineers into politics. Nick Smith has a background in engineering and you don’t hear anyone complaining about his performance.

It is an intoxicating idea that achieving some ideal state of the world is as easy as giving well-intentioned politicians the appropriate economic levers. Economists are always trying to ruin the party with sobering quotes like Friedrich Hayek’s: “The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.”

What rubbish! We all know good intentions always produce good outcomes. History is filled with examples of great leaders achieving great things by keeping the economy tightly under their thumb. If Venezuela can do it, so can we!

Sure, politicians may struggle with high school algebra questions, but that is no reason to suggest they could not handle the enormous number of calculations required to engineer the economy. Unlike the individuals that make up the economy, no one would ever suggest that politicians are a collection of tools.

Stay in the loop: Subscribe to updates