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The Significance and Utility of an Economics Major

Question: Explain the significance and utility of your major to the society 10 years from now.

An economics major teaches a student two key principles, first that the future is uncertain and second that values are subjective. This paper will briefly explain the significance and utility of an economics major, attempting to demonstrate that whilst these two principles hold in case, the task becomes nearly impossible. Further still, a ‘society’ consists of many individuals with differing interests and valuations. Therefore, as educational choice is individual human action, an interfering government is a fundamental barrier to any revival of educational freedom to promote an enhanced human experience within the society.

Economists use logical and deductive reasoning to view subjective values of real actors as the ultimate cause of all economic outcomes. Each actor ranks (majors) and chooses between various ends or the next best alternative, and these scales of preference may be called utility. As values are subjective, therefore there is no such objective unit in the field of human valuation to assess the utility of an economics major, now nor in the next ten years.

An explanation of a student to undertake an economics major under such uncertainty would be that free markets allocate the supply of goods to buyers who value them most highly – measured by a buyer’s willingness to pay. As a transaction, however only takes place when both parties benefit, the individual must determine subjectively for themselves whether they are better or worse off as a result. The preference can only be expressed in terms of simple choice, or ranking of alternative majors.

However, in considering the amount of students who choose an economics major over other majors should not be considered as absolute. As these students way up the costs and benefits to themselves, all action involves the employment of scarce means to attain the most valued ends. In fact, any positive externality or utility on society from studying an economic major would in effect be cancelled out due to the amount of unpaid student debt – a burden placed upon taxpayers.

Surprisingly although FEE-HELP debt attracts a loan fee of twenty five per cent, students would point to only one area in which the price tag is clear, and the impact on them is immediate: textbooks. Unlike private education, with a lack of substitutes textbook publishers and public institutions compete on anything but the price, are subject to bureaucratic regulations and need not please the end user at all. Rather we must create a price incentive for students to choose degrees that will likely enable them to pay back loans quickly or seek scholarships. Even a summer job doesn’t have the purchasing power it used to have about tuition fees, as a result of the leniency on repayment and ease of obtaining government loans.

Economics is a social science that studies the production, distribution, and consumption of goods and services. While, the economic way of thinking shows us how economies function through individual behaviour and interaction in the marketplace. Even though this major can shed light onto the functioning of the economy in light of recent significant events, in particular the Great Recession and its lasting impact. The theory must not be deducted to a single mission that ends up in a failed attempt at controlling the economy (as the economy is not a thing it is a collection of individual actors).

As once early economists devoted themselves to the study of problems of economics, today economics as a profession surely draws upon the role of government interventionism. “[The professional economist] is an expert in the field of economic legislation, which today invariably aims at hindering the operation of the unhampered market economy.” (Mises, 1949, p.865) While, this supercilious attitude relegates economics to a level of commonplace. That is why, “[economics] is haunted by more fallacies than any other study known to man.” (Hazlitt, 1946, p.3) Precisely because of the pleading of special interests.

When current state funding for economics is awarded to analysing the question of why has economics fallen out of fashion with younger women, this precisely undermines the significance to economics as a field of study. If there presents itself a decline in those wanting to study economics at present, it represents one’s time preference, valuing either to work now and rather to study in the future. Social planners (policymakers) might also care about equity – the fairness of the distribution of wellbeing among the various buyers and sellers. That results in such problems, according to the Grattan Institute, taxpayer funding for higher education is totaling “[…] $52 billion of HELP debt outstanding, the government has to find ways to control its costs.” (Norton & Cherastidtham, 2016, p.3)

While graduates typically leave with between $18,000 to $40,000 in debt. Realistically, no private institution would lend this much-unlimited capital based on such a young demographic without a credit history. “This must also include a rethinking of the means, methods, and institutions most suitable for the education […]” (Ryan in Rothbard, 1999, p.5) For an economic major to benefit society now or in the future, and before a student can be able to specialise in an area that is profitable (in innovation and/or capital), there must be a deregulation of higher education loans that currently cause malinvestments.

Adam Smith in his 1776 book An Inquiry into the Nature and Causes of the Wealth of Nations, produced a detailed analysis of trade and economic interdependence, which economists still adhere to today. Interdependence is the norm because people are better off when they specialise and trade with each other. Patterns of production and trade are based upon differences in opportunity costs. Without trade economic gains are diminished. Everyone would be better off if they specialise in producing the product that they are more suited to produce and trade. Innovation from around the globe impacts each individual, that may result in better healthcare to safer nations. Wealth has increased, products are much more affordable and accessible.

“As Maritain notes, [specialization] dehumanizes [human] life.” (Maritain in Trapani, 2004, p.91) However, specialization is a fundamental aspect for educating a person for adult life. “The danger [is] the utilitarian aspect of education (i.e., job training) might, in the thinking of the prevalent culture, displace or overshadow the essential aim of a truly liberal education.” (Wiles in Trapani, 2004, p.91) Although, job training is a fundamental part of education that prepares society for work. Work as a means to fulfil an end, whether that end is wealth, happiness, or an enhanced human experience. “Human perfection or happiness is activity in accordance with the moral and intellectual virtues.” (Wiles in Trapani, 2004, p.92) Education would then require more specialisation as “[there] would be a need for more general social and moral rules (e.g. rules for the whole community) but there would also need to be more specific social and moral rules which apply to specific specialised interactions.” (Brook et al., 2014, p.4)

Social life, and therefore specialization can expand human educational experiences. “As I sat contemplating the miraculous make-up of an ordinary lead pencil, the thought flashed in mind: I’ll bet there isn’t a person on earth who knows how to make even so simple a thing as a pencil.” (Read, 1964, p.136) There isn’t a single person who contributes more than a small amount of know-how to the complete making of a pencil, due to the countless human beings who had a hand in its creation. (Read, 1964, p.141)

Economics as a major gives one the ability to emphasize private property, entrepreneurship, free markets, and sound money as the key drivers of economic performance. “The flowering of human society depends on two factors: the intellectual power of outstanding men to conceive sound social and economic theories, and the ability of these or other men to make these ideologies palatable to the majority.” (Mises, 1949, p.860) In conclusion, society as in the individuals cooperating within society must offer a practical faith in sound economics, and let the law remove all political obstacles, to merely permit the free flow of cooperation.

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