Friday, September 07, 2007

EVERYTHING is economics

I've said this many times before: economics isn't the study of money; it's the study of incentives, choices, and consequences.

In this video from the TED conference, economist Emily Oster performs an economic analysis of the spread of AIDS in Africa and shows once again, it's about the economics (which means it's about peoples choices and incentives):

What is abundantly clear here, is that government aid does little or nothing to combat AIDS; but choice, and incentives do a hell of a lot.

This is one of the fundamental principles of libertarianism in action. Rational actors, making rational, self interested choices.

Now, here's another TED conference video, but this one you may have heard of before; it's Andrew Mwendas speech about how foreign aid has actually HURT Africa.

Mwendas central point (though the language he uses may be a little to the left of the way I would put it) is that foreign aid has hurt Africa, because it has isolated the people from market driven incentives and consequences; and has in fact created perverse incentives towards greater poverty, and policies which HURT the people (and the ceonomies) of Africa. This is because more poverty means more aid, which means less attempts (and less success) at breaking out of poverty, ad infinitum.

Everything is economics, really.