Dummy's guide to economic logic

"I spend therefore I am"

Do you think you need an Economics Major to debate Economics motions? Well it may gave you an edge but inherently debating economics is not as daunting as it looks. Understanding scarcity, tradeoffs and social welfare is not difficult. You just needed an article like this in your life.

What is economic logic?

The first axiom of Economics is that "resources are limited", which means you can either allocate scarce resources to do A or B, you cannot have equal resources allocated to both A & B. Everyday individuals, firms and entire governments make choices on how to divest limited resources and money available to them. When I come to college, I have already spent 40 rs on an Iced tea, now i can either spend another 40 on greek yogurt or another Iced tea, I do not have the budget for both. Similary Governments make choices as to which departments of the economy will get more money and will get less. Railways may get more budget than the ministry of culture and tourism for justifiable reasons. This choice based framework based on utilitarian reasons is Economic Logic.

For Debating fundamentals, Here are the 5 most important principles you need to know and consider

1. Oppurtunity Cost

Because resources are scarce, every choice you make involves foregoing an alternative. If I buy Iced tea with my other 40 rs, The Greek Yogurt is the oppurtunity cost I pay. I chose to pay that oppurtunity cost because I need something refreshing without a concern for calories, more than the texture of greek yogurt (👅)

In economics motions, you will often come across motions that specify the oppurtunity cost that the individual or government is paying in contrast to the alternative that is being preferred. For example - "THW prioritize climate mitigation over economic growth in developing nations"

Here, the oppurtunity cost being incurred is Economic growth in developing nation and the preference is being put on climate mitigation. In economics debates, tradeoffs are justified by metrics, the most important of which is "net positivity" to the largest group of stakeholders in the debate, which is very usually the average citizen.

Gov bench has to prove as to how climate mitigation will benefit the life of the average citizen more given their needs of clean, air water and a sanitary environment and at the same time prove as to how the alternative cannot provide that.

Gov bench has to rationalise the oppurtunity cost while opp bench has to prove that preferential option is worse off on different metrics, which can be sustainability, economic growth etc.

2. People respond to incentives

Why did I not misbehave in school (in theory) or why do I opt into college education? Why does a firm decide to setup its factories in a Special Economic Zone? Why do governments opt into trade deficits? All of these occur under the ambit of Incentives, or simply reward and punishment. I dont misbehave in school because my punishment can be a suspension, which looks bad on my record; Businesses setup factories away from urbanised zones where they would have highest market accessibility because they are sacrificing that for gaining other incentives such as subsidized electricity, water supply or lower land purchase price and sometimes social good.

Incentives are simply factors that motivates an individual, business or government to take certain actions or make specific decisions. Incentives are based around the potential of gaining a benefit and avoiding a cost.

A law or policy has to create an incentive for people, firms or governments to opt into it to reach the policy's desired outcome, these incentives have to align with behaviour. We will take for example a motion "THW impose a higher tax on billionaires"

Gov bench in a motion such as this has to weigh as to what benefits would a state have in creating a seperate bracket of taxation for its richest 1% and doing all the leg work of complex taxation policies to tax these people and potentially risk these people's incentive to invest back in the economy. Gov has to argue that the benefits such as increased tax revenue, stop gap to fund embezzling, illicit overseas trades and ultimately provide more back to the public and neutralise income inequality in a country are adequate enough to create a strong state opt-in.

Opposition would argue that such an opt-in does not exist given how the funding and investment pools that these billionaires create (for example Ambanis creating industries in India) has a much better capacity for objectives such as employment generation than the self-recognised capacity of the state, as the overreach of the state's authority would discourage economic activity in the country.

In a motion which involves creating or debating a law or policy, especially economic, you have to explain why incentives for the stakeholders exists or does not exist, and if the desired outcome will be/wont be reached/has been/has not been reached. Without stakeholder opt-in there is no point of a law or policy existing.

3. Efficiency ≠ Equity

Efficiency and equity are central yet competing goals in economics. Efficiency is concerned with generating the greatest returns with the limited resources available. Equity on the other hand is concerned with fairness rather than high returns, ensuring everyone gets access to resources with reduced disparity.

To encapsulate this in an example: Efficiency is when Microsoft lays off 40000 workers to maximize profits for the stakeholders because AI can do their jobs anyways. Equity is the Indian government's reservation schemes and policies such as 10% seat reservation for women in the parliament for fair representation in a rather patriarchally embellished country.

A policy or metric that leans on high efficiency does not always generate the best equity. Debates typically tend to lean more towards the direction of equity(fairness) than efficiency, only under very special circumstances is efficiency given a place above equity as a metric in a debate. You gurantee equity on your side better by analysing how your policy or argument shares resources/revenue better with marginalised/non-mainstream sections of the economy and helps them come out of their economically disadvantaged position in the long run.

Lets take for example a motion, "THW privatize healthcare". Efficiency based arguments which has to come from the gov bench would talk about less waste spending and better heathcare services due to the inert nature of market competitiveness, leading to overally better access to healthcare for citizens. Equity on the opp side would tout how access to healthcare for the poor, the rural sector would be cut off because they are not inherently profitable and "less waste spending" may cut off healthcare jobs because of automation.

The tradeoff of accessibility has to be justified in favour of better healthcare infrastructure by the gov and the opp has to justify the tradeoff of the former for better equity.

4. Externalities

Some or most economic actions have a spillover effect on someone who did not play any role in that decision, this is called Externality, now this can either be good or bad. A public park coming up in a neighbourhood is a positive(good) externality because it benefits everyone's well being in the neighbourhood. A factory coming up in the countryside means its providing jobs to many (positive externality) but also now polluting the countryside with chemicals and smoke (negative externality).

However an important thing to note is that private firms inherently do not care about externalities, true social or spillover costs are not incorporated into market decisions or cost benefit analysis. If a corporation could they would buy up all rural land and turn it into industrial base, disregarding of environmental or demographic consequences. This is where governments have to intervene through subsidies, taxation, law and other incentives (see section 2) to make firms care about externalities.

Teams need to analyse the inherent nature of externalities that may benefit or impact the stakeholders of the debate which are often larger than the original decision making actor. Lets take for example a motion "THW ban fossil fuels", Gov would highlight the negative externalities of pollution and climate change, arguing regulation or bans to protect society at large. Opp may counter this by pointing to consequences such as not meeting energy demands and economic slowdown which will be a far greater negative externality.

Typically when debating externalities, especially negatives, the point is not to ignore or mech out its existence, but to flip it and push a bigger harm on the other team, as seen on the motion above. The price that a lot of people will pay due to not meeting energy demands is a lot more than benefits from combatting climate change.

5. Marginal Thinkng

Marginal thinking is about focusing on the impact of the next step, rather than the whole picture. In economics, it means weighing the extra benefits and costs of one more unit of action to decide if it’s worth doing. People use marginal thinking to make smarter choices, avoiding wasted effort or spending where benefits don’t outweigh costs. For example, buying a second slice of pizza might bring less satisfaction than the first, so you decide based on the ‘extra’ enjoyment it adds.

Private firms also tend to think at the margin, investing more only when the additional profits exceed additional costs. But this is not always good and forms the ambit of many debates.

Take the motion "This House Would Cap Military Spending." Marginal thinking here means looking at whether spending just a bit more really makes a difference in national security, or if those extra funds could be better used elsewhere, like education or healthcare. The government side might argue that capping spending stops waste on diminishing returns, while the opposition might say every extra dollar ensures critical defense. Marginal thinking helps debaters zoom into these trade-offs and decide if the next increment of spending is justified compared to its cost.

As a debator, you have to use cost-benefit analysis to prove these two things at minimum:

1) Is the added benefit really worth it?

2) Why would the stakeholders care?

On a comparative, the opposition can wash the cost benefit analysis by proving that the stakeholders do not gain anything or either they do not care enough for various reasons.