OPINION: Why We Have to Let Go of Utopian Thinking

Author: David Yee
Created: 19 August, 2015
Updated: 16 October, 2022
3 min read

Most of my academic training has been in economics and business school, and one thing that never ceases to surprise me is how many people neglect to realize that most of economic and business theory (as well as the political opinions they create) is a utopian dreamworld -- something that could never happen in the real world.

When we think of a utopia, we often think of some mythical place where everything is just right -- not just Goldilocks right, but perfect. But even in the original utopia, Sir Thomas Moore's world (and almost all utopias since) have one commonality... That we could achieve this level of perfection if we had the courage, motivation, skill, leadership, political will, etc. to just get it done.

In the economic and political world, Thomas Malthus (1766-1834) had one of the most profound and lasting of all utopian ideals -- ending poverty was as simple as stopping to help the poor. To Malthus, the poor over-bred, caused their own troubles, and if they did receive help, they'd just drink it up in liquor or ale. Sound familiar?

An idle perusing of Facebook on any given day would find us any number of memes, all espousing the same ideals: end welfare, drug test the poor, or don't encourage helplessness.

So what would happen if we really had the political will to end entitlements, to force the poor to really fend for themselves?

In late 2013 and early 2014, the U.S. government trimmed the SNAP (food stamps) program by a total of just shy of $6 billion. Many heralded it as one of the most courageous political steps -- a significant reduction in the program.

While 23 million households (yes, 20 percent of U.S. households) felt the pinch, the single biggest entity to feel the bind was Walmart, which had to lower forecasts twice during the next quarter, warning investors of lowered sales.

Walmart hauls in 18% of the total SNAP spent in the United States, and felt the billion-dollar annual pinch to sales in just one quarter from the drop in benefits.

In short, if we cut off the poor, how many businesses are we willing to put under?

This is the disconnect the utopian mindset has: forgetting the accounting reality that one person's spending is another person's income.

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Walmart still hasn't recovered from the sudden drop in sales, causing various ripple effects throughout the organization -- and it has shown up in the company's flat sales (and up and down, but mostly flat stock price) since 2013.

In an economy with $17.5 trillion changing hands yearly, a population of 320 million, and a federal government with a $3.9 trillion budget, the economy is so entangled and dependent on each sector that any changes in spending of one sector will have unforeseen butterfly effects as the cuts take hold upstream.

This is the true danger of utopian thinking: there are no simple answers and when we think we have one, we're probably dead wrong.

It's easy to have a quick fix for immigration, health care, poverty, business expansion, the economy, or the national debt, but when it really boils down to it, the only answers (or at least good answers) come from expanding the economy and each person's share.

That takes work, not clever schemes or ideas. Real work, real investment, and real equity in the distribution.

And how do we accomplish this? Well, the answer to that is quite simple . . .

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