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Even The Amish Know Economics

Amish people are an interesting lot. They are real people, just like everyone else. They have all of the human needs and wants, and they have the same human intelligence to fill those needs, but they also feel a need for cultural resistance, to be separate from the modern world and its ideas that they find are not be in keeping with their Christian values. The Amish buggy is a symbol of that resistance and separateness, an identity that demonstrates that they are different, much the same as their clothing.

For varied cultural reasons, they don’t own automobiles. They do, however, interact regularly with English (i.e. non-Amish). They go to the grocery store, they buy building materials that they can’t get from Amish sawmills, they travel to the cities to shop, and they provide services to English. They need to get around, but the horse and buggy is slow. The choices that they have are to do work and interact only in their local vicinity, to waste a lot of time traveling further away, or to find an alternative way to get there.

I talked with an Amish man who was working nearby and told him that I might have some work for him when the weather breaks. He showed up another day in a car,and the driver waited for him. There is no prohibition for the Amish to ride in cars, and that driver is the alternative way for him.

The driver needed to be paid, though, and there are some folks who make a living driving the Amish around. The round trip in a buggy could take a couple of hours or more, which wastes time that could be better used in productive work. The Amish builder, living within the rules around which he organizes his life, made the decision to use his resources, money, to save time. The Amish know the value of the division of labor and comparative advantage, though they may not know those terms or use them as such.

The Amish know that, under given circumstances, more people will buy or buy more of a particular good or service at a lower price and less when the price is higher. They know that everything is a trade-off, that resources are scarce, and that being productive gives them the opportunity to live more satisfying lives. They recognize the value of protection against risk, and though they don’t purchase formal insurance products, they have their own community risk pools, directly helping each other through disasters and hard times.

Economics, at its base, is a recognition of how society works, how people interact, and the effects of actions. Formal economics is the attempt to be more precise and scientific, but the work of economics is simply to understand human interaction. That work sometimes goes off course because the economics profession tries to fit the economy into a convenient, controllable box, and often does more harm than good by the activities it engages in and the things that it teaches.

Professional economists do a disservice by viewing the economy is a machine that they can tweak through political intervention. Those interventions often have severe negative consequences and usually involve the violation of the rights of the people. Though the concepts are not that difficult to understand, millions of people with formal economic education still promote price controls, protectionism, government-sanctioned monopoly, and minimum wages, despite the overwhelming weight of evidence against them.

People engage in economic reasoning every day, all day, even the Amish. The economics profession can help by making people aware of the limitations of political intervention and by promoting correct assumptions about reality, things that it, collectively, is not doing very well these days.

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