Guns and Butter

Now let me preface this blog with two things: first, let me apologize for waiting months to write. In all honesty it's been a mixture of laziness and lack of inspiration. there are so many things I could have written about, but i was honestly waiting for the perfect idea to come to fruition because there was a particular thing i wanted to address. second, that I spent the better part of two hours writing about a completely different subject before coming across this draft in my blog posts. Now that I’ve discovered it, I realize I like it better, it seems far less sentimental and corny than the one I was writing tonight. (perhaps I’ll save that one for a more emo day).

Second, I’ve been waiting for the right theme to come up that meshed well with something I was very adamant about addressing in whatever I wrote about next. Months ago, when I first tried to write about this, a person who’s opinion I hold in very high esteem and who shall remain nameless, gave me new motivation to maintain my blog and for that, I sincerely thank you. This is a long way from dedicating my first book to you (that moment is yet to come), but this one's for you. Cheers.

The title should give you a clue as to what this blog will partly talk about. Guns and butter are two completely different goods that really have nothing to do with each other, but it's a great example...so great in fact that it has transcended decades and endless high school economics classes. I'm certain every high school student in the english speaking world has been exposed to this example, possibly with different goods, but for those who are suffering from early onset senility, here's a refresher:

For the ease of learning, an economy has only two goods: guns and butter. There's only so many guns this economy can produce, as with butter. Also, there's a number of combinations of guns AND butter that can be produced. The countless number of combinations that can be produced create a curve known as the productions possibility curve (PPC) or frontier.

Anyway, from this example, i hope you can see the big question every economy must answer. WHERE does the economy produce? Too many guns and the population will starve. Too much butter and we won't have enough guns! (let's think national defense here). SO which point is the RIGHT point? The problem with this answer is it depends. If the economy is in the middle of a war we clearly want more guns. If we're about to face winter, maybe we'd want to produce more butter so we can stock up our pantries. HOW DO WE KNOW WHICH POINT IS CORRECT??? Economically, ANY point on this PPC curve is correct, but for each economy that exists, there is certainly a more desirable point on this curve than all of the others. The age old question is: which one?

Anyway, before I bore you with this rhetorical question, i'm applying this example of the PPC to the decisions a lot of people in this world are forced to make. For instance, instead of guns and butter and again for the sake of simplicity, there is only passion and money. We can either choose to spend more time on our passion, or spend more time making money.

There is an endless combination of how much time to allocate to each thing, but again, which point is the right point? Now like I addressed in the beginning, this blog is dedicated to someone and this someone also gave me the idea for the topic. I was asked about some potentially life changing decisions, which long story short, consisted of potentially making a lot of money but neglecting one's true passion (not completely, but the neglect could be significant) or making less money but being able to dedicate a lot of time to one's true passion.

Answering this question in the real world is complicated and depends on countless factors. For instance, how GENUINE is this passion? How money- motivated are you? Do you want to be living a life of endless luxury and someday have your own hangar in an airport with your G6, or will you be happy living a simple but financially stable life? There are also the repercussions of your decisions. You could choose to go with the former (making a lot of money), but end up regretting not spending more time dedicated to your passion (like the art of making chinese fingers traps, for all comedic purposes). Or, worse case scenario, you make so much money (think Gordon Gekko) that you alienate everyone, end up alone in your 20 million dollar mansion, and are forced to leave your entire estate to your butler Alfred. I won't drone on with choosing the latter, or the repercussions of it, because I'm sure you get my point. CHOOSING WHERE TO BE ON THE PPC IS HARD.

I thought about what I said to this person when the subject first came up and what I would say now. And what I would say now is this: I can’t possibly answer this question for you, but think of guns and butter. Money is to guns as passion is to butter. You need both in life to be happy and for the sake of this argument “profit-maximizing”. Any economist will tell you, no economy has ever chosen all guns or all butter.

This one's for you,

Your Aspiring Economist