There has been a lot of flap … and I mean more than the usual amount of flap over a comment Pres. Obama made last week regarding working moms and stay-at-home moms, and the meaning behind what he said. I have mostly stayed out of the flap, but after reading thru a comment thread on facebook about this topic, which only involved men, I wanted to say my bit.
Here is what Obama said, “”Sometimes, someone, usually mom, leaves the workplace to stay home with the kids, which then leaves her earning a lower wage for the rest of her life as a result. That’s not a choice we want Americans to make.”
Some people have felt it was a slam on stay-at-home-moms, some have defended the statement by saying that it was intended to help women who work outside of the home. I will tell you what I think and why.
Before I do that, however, I want to establish baseline so you can understand where I am coming from. In my former life, I taught high school social studies. My favorite subject to teach was economics (I know my three, yes three, BYU Econ 110 professors are laughing at that now, but anyway …)
The first thing I would always explain to my students was, opportunity cost. The Merriam-Webster Dictionary defines this as: “The added cost of using resources (as for production or speculative investment) that is the difference between the actual value resulting from such use and that of an alternative (as another use of the same resources or an investment of equal risk but greater return).” In every economics textbook I ever learned from or taught from they always used the examples of guns and butter to explain this concept. I know, because those two things totally go together, right? But the example explained that you have a certain number or amount of resources. You have to decide how many guns, or how much butter you are going to make from your resources.
Really, though, in plain English what opportunity cost means is, you can’t do it all, or have it all, or buy it all, because you have finite resources which will not cover everything. Those resources might be time, money, talent, or a number of other things. But the fact remains, we all make choices every day, all day, in which we sacrifice one thing for another. Guns or butter, you decide. Continue reading →