Economic Philosophy
Economic Philosophy
Any philosophy—economic or otherwise—must rest on a set of foundational axioms. At PlanWiser, we ground our understanding of economic behavior in several core principles.
Human Limitations
We begin with the recognition that humans are inherently limited in knowledge, morality, and capability. While individuals may differ in the extent of these attributes, none come close to perfection in any single dimension, much less across all three. These human limitations are persistent and unchanging.
Trade-Offs
Trade-offs are an inherent aspect of economic decision-making, making perfect solutions unattainable. Every choice entails both costs and benefits, and efforts to eliminate all negative outcomes often result in more serious long-term consequences. When trade-offs are overlooked in pursuit of idealistic objectives, decisions are too often guided by intentions rather than grounded in practical realities, leading to ineffective or even harmful outcomes.
Decentralized Decision-Making
When decision-making is concentrated in the hands of a few, those individuals inevitably operate with less information and a narrower perspective than society at large, limiting their capacity to make informed, adaptive choices. Therefore, decisions are most effectively made within a society that protects and promotes individual freedom. Such societies empower individuals to exercise personal judgment and respond to local conditions.
Free Markets
Building on these axioms, we affirm the role of free markets as the most effective system for fostering economic flourishing. While free markets do not deliver a perfect society—because they are composed of imperfect individuals—they offer the best opportunity for prosperity. They allow human beings to act in accordance with their nature: to create, innovate, and produce. Free societies distribute knowledge more effectively than centralized systems, enabling markets to reflect actual preferences through price signals rather than through imposed theoretical ideals. This decentralized mechanism of exchange and coordination aligns with the complexity of human needs and capabilities far better than any top-down model.
Debt
Government deficits and mounting public debt are not just abstract policy concerns—they represent real risks to financial freedom, economic stability, and generational stewardship. When governments spend beyond their means, they often obscure the true cost of their promises, creating hidden burdens through inflation, taxation, and reduced economic opportunity. This disconnect fosters short-term thinking, moral hazard, and dependency—undermining the values of personal responsibility and long-term wealth creation. Our approach is built on the principle that lasting prosperity comes from disciplined saving, productive investing, and living within one's means—both individually and as a society.
Taxes
We believe a simpler tax structure leads to better outcomes. When tax systems are overloaded with complex incentives and loopholes, individuals and businesses often spend excessive time and resources trying to interpret and navigate them—time that could otherwise be invested in productive, value-creating activities. Moreover, complexity tends to favor those with the means to exploit it, inadvertently disadvantaging those who do not.
We also hold that, where possible, less taxation can be more effective than more. Providing individuals with greater control over how their money is used increases the likelihood that those resources are allocated in ways that reflect their values and contribute meaningfully to their lives and communities. Ultimately, our philosophy supports a system that empowers people to make informed, intentional choices with their capital, rather than being overly guided or constrained by policy.
Virtue
Finally, the success of any economic system depends not only on its structure, but on the character of its participants. A virtuous society enhances economic performance by fostering trust, responsibility, and mutual respect. Stewardship—not indulgence or reckless consumption—is the proper posture toward wealth. The more a society cultivates virtue among its citizens, the more resilient and productive its economy will be.
In summary, economic freedom, rooted in human dignity and guided by virtue, provides the strongest foundation for sustained and meaningful prosperity.
References Supporting Economic Philosophy:
📘 1. Human Limitations: Epistemic, Moral, and Practical
“The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.”
—F.A. Hayek, The Fatal Conceit (1988)
Key Source:
F.A. Hayek, The Use of Knowledge in Society (1945)Argues that central planners lack the dispersed, tacit knowledge embedded in individuals throughout society.
Demonstrates why no individual or institution can fully grasp the complexity of economic systems.
Additional Support:
Thomas Sowell, Knowledge and Decisions (1980) – Explores how decision-making is constrained by the limits of what people know, even when intentions are good.
Herbert Simon, Administrative Behavior (1947) – Introduced the concept of bounded rationality in human decision-making.
⚖️ 2. Trade-offs & Unintended Consequences
“There are no solutions; there are only trade-offs.”
—Thomas Sowell, A Conflict of Visions (1987)
Key Source:
Thomas Sowell, Basic Economics (multiple editions)Emphasizes that scarcity forces choices, and every policy has costs as well as benefits.
Excellent for clients or policymakers who think "intentions" are enough.
Nobel-Backed Support:
Milton Friedman, There's No Such Thing as a Free Lunch (1975) – Highlights policy trade-offs and how costs are often hidden or deferred.
Paul Samuelson, Foundations of Economic Analysis (1947) – Pioneering use of opportunity cost and marginal trade-offs in economic modeling.
🏛️ 3. Decentralized Decision-Making & Local Knowledge
“It is better to be approximately right than precisely wrong.”
—Carveth Read, popularized in economics by Hayek
Key Source:
Elinor Ostrom, Governing the Commons (1990)Nobel Prize-winning work showing how local institutions often outperform centralized regulation, especially in managing shared resources.
Reinforcing Literature:
James Buchanan & Gordon Tullock, The Calculus of Consent (1962) – Shows why individual choice and local governance outperform coercive central authority.
Mancur Olson, The Logic of Collective Action (1965) – Describes how public goods are better managed via decentralized incentives.
📈 4. Free Markets as Adaptive Systems
“The real problem of a rational economic order is not merely a problem of how to allocate ‘given’ resources… It is a problem of the utilization of knowledge which is not given to anyone in its totality.”
—Friedrich A. Hayek, The Use of Knowledge in Society (1945)
Key Source:
Israel Kirzner, Competition and Entrepreneurship (1973)Expands on Austrian economics to show how entrepreneurial discovery and price signals create order without design.
Classics:
Adam Smith, The Wealth of Nations (1776) – Origin of the "invisible hand" idea, arguing markets coordinate self-interest into collective benefit.
Milton Friedman, Capitalism and Freedom (1962) – Explores how economic freedom is a necessary condition for political freedom.
🌱 5. Virtue, Character & Stewardship
“Liberty cannot be established without morality, nor morality without faith.”
—Alexis de Tocqueville, Democracy in America (1835)
“The free market serves as a ‘school of the practical virtues.’ It rewards honesty, reliability, and self-control—not by accident, but by design.”
—Stephen Grabill, Acton Institute
Key Source:
Deirdre McCloskey, The Bourgeois Virtues (2006)Argues that capitalism and market systems depend on and reinforce virtue: trust, courage, temperance, and dignity.
A moral defense of economic freedom that aligns well with PlanWiser’s human-centered framing.
Classical Support:
Michael Novak, The Spirit of Democratic Capitalism (1982) – Explores how economic systems thrive when built on moral and spiritual foundations.
Victor Claar & Robin Klay, Economics in Christian Perspective (2007) – Highlights how responsibility and stewardship contribute to prosperity.
💸 6. Deficits and Debt
“The fact that the government can spend money it does not have is the most dangerous power it possesses.”
— David Bahnsen, There’s No Free Lunch: 250 Economic Truths (2021)
Key Source:
David Bahnsen, There’s No Free Lunch: 250 Economic Truths (2021)
Offers a comprehensive, principle-driven critique of deficit spending.
Combines economic insight with moral and philosophical grounding, especially within a market-oriented Christian worldview.
Supporting Literature:
Friedrich Hayek: The Road to Serfdom (1944) - Critiques central planning and fiscal expansion as threats to freedom.
Thomas Sowell: Basic Economics (2007+) - Explains how deficits distort market signals and accountability.
🧾 7. Taxes
“The power to tax involves the power to destroy.”
— Chief Justice John Marshall, McCulloch v. Maryland (1819)
Key Source:
Milton Friedman, Capitalism and Freedom (1962)
Makes the case for flat, transparent taxation and minimal state interference.
Argues that tax complexity erodes personal liberty and distorts incentives.
Supporting Literature:
Adam Smith: The Wealth of Nations (1776) - Establishes the four canons of taxation: equity, certainty, convenience, and efficiency. In Book V, warns that convoluted tax regimes undermine economic vitality and transparency.
Friedrich Hayek: Law, Legislation and Liberty (1973–79) - Advocates predictable legal-tax frameworks over coercive redistribution.