Economisti

You see a man drowning. You are about to toss him a life preserver. But then you remember Mankiw’s words: there is no shame in figuring out what the market will bear. “How much would you pay for me to toss you this life preserver?” you shout to the man. “Blub,” he replies. “I’m afraid ‘blub’ just won’t do,” you call back, beginning to walk away. Through mouthfuls of seawater, he manages to spit out the words: “I’ll pay whatever you want, just toss the damn life preserver!” As he thrashes about, struggling for his life, you manage to strike a deal. You will toss the life preserver, and he will turn over all his worldly assets to you as soon as he hits land.

For economists, what has just occurred is an efficient transaction. Each person has been made “better off.” The person who tosses the life preserver gets paid, and the drowning man gets saved, by paying someone to toss a life preserver. Everyone is happy.

Of course, in reality, you have extracted a person’s entire wealth from them by threatening to let them die, and callously refused to engage in the most basic of moral human behaviors unless you get paid for it. You have acted like a total sociopath. (Or, in other words, like an economist.)

Do Economists Actually Know What Wealth Is? (2016)

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