Organized, ‘Common Sense’ Economics for Graduates
It’s commencement season, but one must go back nearly twenty years to find a major institution of higher learning that featured a moderate-to-conservative, no-happy-talk commencement speaker.
One such speaker is worth the time to review.
In 2007, Nobel laureate Thomas J. Sargent, Economics Professor and Senior Fellow at Stanford’s Hoover Institution, spoke to graduates at an institution among those least likely to welcome him, ultra-liberal UCal Berkeley..
There, Dr. Sargent called economics “organized common sense,” and listed some “valuable lessons” which economics teaches objective practitioners – or should – but which are commonly ignored by politicians who control our massive, overreaching government, and by the ideological economics academicians who rationalize, excuse and support them.
Among other things, Sargent said:
“Many things that are desirable are not feasible.”
“Individuals and communities face trade-offs.”
Nonetheless, politicians disregard sensible tradeoffs and legislate unfeasible programs. In 2025, the Government Accountability Office (GAO) identified 38 federal programs considered inefficient or unfeasible.
Sargent: “Other people have more information about their abilities,…efforts, and… preferences than you do.”
Yet, public officials advocate and attempt to impose one-size-fits-all policies like single-payer health care systems that threaten Americans’ access to quality health care.
Sargent: “Everyone responds to incentives, including people you want to help. That is why social safety nets don’t always end up working as intended.”
“In an equilibrium of … an economy, people are satisfied with their choices. That is why it is difficult for well-meaning outsiders to change things for better or worse.”
Nonetheless, politicians seem surprised that generous public welfare programs, policies that effectively make single motherhood a career choice and remove incentives for education, work, marriage and sexual and social responsibility, produce many single mothers and welfare recipients.
Sargent: “In the future, you, too, will respond to incentives. That is why there are some promises that you’d like to make but can’t. …The lesson here is this: before you make a promise, think about whether you will want to keep it if and when your circumstances change. This is how you earn a reputation.”
“Governments and voters respond to incentives too. That is why governments sometimes default on loans and other promises that they have made.”
As a general statement, one can reasonably conclude that both positive and negative incentives work, but the latter are more common, work more quickly and last longer.
Since 2008, governments, primarily, but not limited to Democrat administrations and congressional majorities have broken promises on ethics, transparency, deficits, health care, “red lines” and others, shredding their credibility and reputations at home and America’s abroad.
For example, then-President Barack Obama famously said, “If you like your health care plan, you can keep it. Period.“ His administration’s policy defaults on Obamacare reached desperation within months of the “Affordable Care Act’s” passage.
Ironically, by changing the law without congressional authorization, Obama unilaterally destroyed Obamacare in order to “save” an unfeasible program that ballooned the overall costs of healthcare, but one congressional Democrats are still trying to keep afloat by throwing more money after bad.
Sargent: “Most people want other people to pay for public goods and government transfers (especially transfers to themselves).”
Our officials have been transferring wealth from America’s middle class to generous special interests who fund and to other Americans who vote reliably for the politicians who promote transfers, e.g., public and corporate welfare recipients, alternate energy interests, Big Pharma, Big Tech, and others.
Sargent: “It is feasible for one generation to shift costs to subsequent ones…”
“When a government spends, its citizens eventually pay, either today or tomorrow, either through explicit taxes or implicit ones like inflation.”
Lawmakers have mortgaged America’s future. While fueling inflation, elected officials have spent or committed trillions of dollars of wealth Americans – including many millions of unborn Americans – have yet to earn, and saddled future generations with debt that is not only currently unsustainable, but one that our children and grandchildren may find impossible to repay.
If it is not already, interest on the national debt will become the largest expenditure in the federal budget – larger even than defense or Social Security.
And debt service is an expenditure for which Americans receive…nothing.
This massive accumulation of debt by the American political class is not just irresponsible, it is immoral.
Graduates, self-interested politicians and economics ideologues ignore Dr. Sargent at their own – and at America’s – peril.
https://www.pottsmerc.com/2026/05/31/jerry-shenk-organized-common-sense-economics-for-graduates/
