Economics: Calculation Techniques vs. the Reconstruction of Reason
Economics is not merely a technique for manipulating variables, but a systematic reconstruction of reason and intuitive human actions. Its foundation is a simple principle: resources are always scarce relative to desires. Every choice involves an opportunity cost—the sacrifice of one option for another. Modern science does not reject classical rules but maps their boundaries, accounting for human emotions and communal context.
Opportunity Cost: Accounting vs. Economic Profit
In microeconomics, accounting profit is simply the difference between revenue and explicit expenses. However, for a rational decision-maker, the only true compass is economic profit, which accounts for implicit costs (forgone opportunities). A key intellectual discipline is ignoring sunk costs.
Sunk Costs: The Trap of Continuing Erroneous Decisions
The trap of continuing erroneous decisions stems from the psychological weight of investments already made. Although these costs are irreversible, the fear of failure forces firms and governments to persist in irrational projects. The ability to acknowledge a loss is a necessary condition for improving the chances of future success.
Elasticity of Demand and Supply Distributes the Tax Burden
Elasticity determines who actually pays a tax. The fiscal burden falls more heavily on the side of the market that is less elastic and has a lower capacity to react to price changes.
Protectionism: Trade Barriers vs. Trade Efficiency
While the theory of comparative advantage proves that free trade increases overall welfare, protectionism often wins in public debate. Trade barriers protect specific interest groups at the expense of overall efficiency, generating deadweight loss.
Geopolitics Challenges the Theory of Comparative Advantage
Modern geopolitics introduces a dimension of systemic risk that the market does not price on its own. Dependence on a single supplier can be a catastrophe; therefore, states are moving toward reglobalization, linking trade with security.
Israeli Chutzpah vs. French Corporate Hierarchy
Culture determines economic choices. Israeli chutzpah fosters risk-taking, startups, and the acceptance of failure. In contrast, French corporate hierarchy emphasizes stability, longevity, and a strong role for the state as a guarantor of order.
Behavioral Economics: The End of the Homo Oeconomicus Myth
Behavioral economics corrects the myth of pure rationality, pointing to loss aversion and status quo bias. The voter is not a consumer—their decisions are susceptible to narrative framing and cognitive biases.
The Political Market: The Microeconomics of the Fight for Votes
Modern campaigns are a process of optimization under hard budget constraints. Parties use micro-targeting, treating voters like market segments with varying elasticities of demand for changing preferences.
Polarization Destroys the Median Voter Model
Under conditions of intense polarization, the classic model of moving toward the center (the median voter) fails. Strategies shift toward mobilizing extreme segments, where a signal of radicalism becomes a value in itself.
GDPR and DSA: European Barriers to Political Marketing
Regulations like GDPR and DSA in the European Union drastically increase the marginal cost of digital advertising. Restricting data usage forces parties back to traditional, artisanal forms of citizen engagement.
India and Israel: AI and Micro-targeting in the Service of Politics
In India and Israel, campaigns utilize AI, bots, and deepfakes on a massive scale. With the negligible cost of generating messages, the primary constraint becomes not the budget, but the cognitive capacity and fatigue of the recipient.
The Voter is Not a Consumer: The Limits of Rational Choice
Democracy does not just aggregate preferences; it shapes them. Treating the voter solely as a rational agent ignores the fact that campaigns actively change what people consider right and possible.
Summary
By revealing the mechanisms of our choices, economics uncovers a paradox of human nature: we crave rationality yet succumb to emotion. In a world of algorithmic optimization, where every choice becomes predictable, the key will be the ability to critically renew principles rather than merely professing them literally. Perhaps it is in unpredictability that our hope for preserving identity within the economic labyrinth lies.
📄 Full analysis available in PDF