Sublime

The key to thinking like an economist is recognizing the trade-offs inherent to fiddling with markets.

As Upton Sinclair wrote, ‘It is difficult to get a man to understand something when his salary depends on his not understanding it.’5

“Practical men, who believe themselves to be quite exempt from any intellectual influences,” he wrote, “are usually the slaves of some defunct economist.”

economist Adam Smith,

The idea that more trade is good (on balance) is deeply engrained in anybody who went to graduate school in economics. In May 1930, over a thousand economists had written a letter encouraging President Hoover to veto the Smoot-Hawley bill. And yet there is something else economists do know but tend to keep closely to themselves: the aggregate gains

Seriously. In part that’s because the economics of the twentieth century was overwhelmingly about how best to share existing “pies” of human well-being, rather than how

The headline price of the good understates the true cost to the user because the shrouded attributes, and their costs, are hard to discover.

Good policy uses incentives to channel behavior toward some desired outcome. Bad policy either ignores incentives, or fails to anticipate how rational individuals might change their behavior to avoid being penalized.