Nothing New Under the Sun

Seeing as we can find the economics in everything, the message given by Solomon (the Teacher) is laden with a few foundational principles of economics.

From the book of Ecclesiastes:

7 All streams flow into the sea,

    yet the sea is never full.

To the place the streams come from,

    there they return again.

8 All things are wearisome,

    more than one can say.

The eye never has enough of seeing,

    nor the ear its fill of hearing.

9 What has been will be again,

    what has been done will be done again;

    there is nothing new under the sun.

10 Is there anything of which one can say,

    “Look! This is something new”?

It was here already, long ago;

    it was here before our time.

Scarcity is and always will be a thing

Scarcity—Public Enemy #1—is the fundamental problem for economics (and of human nature). How in the world are we supposed to manage our infinite amount of desires with a finite amount of resources? All streams flow to the sea, yet the sea is never full. If  everyone all of a sudden woke up with $1 billion in their accounts, scarcity would still rear its ugly head. It won’t be enough. We constantly want more. It’s why we splurge and buy stuff we don’t really need.

Your eyes will never see that one thing where you can finally say, “Welp, I’ve seen it all. I can go blind now.” (H/t: Justin Miller at Real Life) Similarly, we will never get to a point where we stop creating things, building technologies, constantly attempting to improve and change. New products, ideas, processes, institutions, will emerge to keep up with our unlimited wants in the face of scarcity.

More is better than less

Building off the problem of scarcity, more of something is always better than less. I’ll steal this straight from Michael Sykuta’s blog, “I remember Ronald Coase once saying, “You can explain 95% of human behavior with the assumption that people prefer more money to less.” I’d argue it might be higher. And if you allow for things other than money, you get 100%. Yes, there are things that people don’t like, and more of that is not better. But whatever thing a person might value, you can safely assume that they believe more is better than less.”

Further along, Sykuta correctly points out that “more more is less better.” This “law of diminishing returns” aspect to more is better than less also aligns with Solomon’s message here: To the place streams comes from, there they return again. Importantly, we never really become happiers. We have spikes of happiness and then return back to some normal state of contentment.

Nothing is new under the sun

Though this isn’t necessarily a foundational principle of mainstream economics, it is important to note that economic analysis must consider this. Implications of both things that are seen and unseen are all in the realm of “things under the sun” when it comes to economics. The role of the economist is to not only observe and state the obvious but also to highlight the unseen implications of social interactions. The classical philosophers did this. Adam Smith was deemed the father of economics by not only observing the obvious but by discussing the underlying theories behind those interactions. In his Theory of Moral Sentiments, he penned pages upon pages on the different forms of sympathy and its role in social behavior. In the Inquiry into the Nature and Causes of the Wealth of Nations, Smith explains the obvious by looking at the unseen implications of mercantilism and other political and economic institutions of his time.

We are all rational beings, reacting to changes in costs and benefits, or incentives. Humans have been doing this since the beginning of time. People do seemingly crazy things not because they are “irrational” but simply because we do not yet understand their perceived cost structures. The role of the economist is to find out those cost structures and simply show how there really is nothing new “under the sun.”

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