The Economist's View of the World

All economists appreciate the power and capability of markets.

Economics contains many schools of thought and a range of opinions, but all economists tend to agree with philosopher Adam Smith’s original message: Markets provide price signals and incentives that allocate scarce resources effectively. A brief study of the dense interconnections in trade can reveal just how much communication, calculation and decision making a well-functioning market can achieve automatically.

This belief in markets underlies economists’ reactions to certain controversies. For example, when people complain about the shrinking size of airline seats, economists tend to believe that, as long as everything is transparent to the customer, a range of seat sizes can suit a range of preferences, thereby maximizing efficiency. Similarly, many people support rent controls, but nearly all economists know that the inevitable results of restricting market prices is rationing, waiting lists and even bribes.

Opportunity cost, marginal analysis and cost-benefit analysis are the tools on which economists rely.

Economists...