How does one attempt to see the unseen? The question may seem more like a Zen koan than vital concern of economists. The idea of tracing hidden consequences of different policies, however, must be discovered anew with every generation of policymaker and economic adviser.
Frederic Bastiat is credited with the original framing of the "seen" vs the "unseen," using the parable a broken window to expose the common fallacy that destruction begets economic growth. Later, Henry Hazlitt would demolish the recycled Keynesian ideas in his time, arguing that government can stimulate "aggregate demand" by spending tax dollars on make-work projects like digging holes. In both cases, the resources used to stimulate spending come out of the pockets of people who would have otherwise spent the money more productively.
This year, Ryan Bourne continues the noble tradition of Bastiat and Hazlitt in his new book Economics in One Virus – a clever spin on Hazlitt's famous "Economics in One Lesson." What can COVID teach us about the pitfalls of government intervention? Bourne lays out the high costs and murky benefits of policies such as lockdowns and mandatory masking, when voluntary alternatives would likely had achieved the same if not better results in terms of mitigating spread, without the devastating effects on small business.
Almost two years into "two weeks to slow the spread," we will revisit the problem of the pandemic from an economic standpoint. Bourne reminds us that economics is not all about dollars and cents – it's the stuff of our daily lives, including the trade-offs that determine our fundamental well-being. To ignore costs simply because they cannot be measured, such as the relationships weakened or business lost, is to commit the oldest economic fallacy in the book.