Economic Allegories

There are stories about economics, with a hidden or obvious meaning.

There are stories about economics, with a hidden or obvious meaning. I've noticed the meaning (or reception of the lesson) is dependent on the open-mindedness of the listener, as sometimes the lessons are about what is, not what some wish it was. But alas, the laws of economics are like the laws of nature: they don't care about your feelings.

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~ Aristotle Sabouni
Created: 2019-01-31

Economics, Allegories • [4 items]

The Broken Window Fallacy

This is a fundamental concept of economics (and logic) about seen advantages versus unseen costs. Henry Hazlitt summed up the art of economics as not merely looking at the immediate consequences but the longer effects of any act or policy, and tracing those consequences not merely for one group but for all groups. In other words, break a window and the glazer might win -- but the shopkeeper and customers did not.

Costs of Defensive Medicine
There are often unexpected consequences for everything we do. I had a minor epiphany for improving a medical device/process, that heads my company (Baxter) agreed would save lives... but they could never use it because of medical liability. When they say, "Defensive medicine"... it is about protecting the company from lawsuits, thanks to overlitigation.

Economics of lies, and fidelity
Increase the economic value of a cheat or lie, and you'll use them less often. Thus permission to do something once (or infrequently) will reduce the likelihood of you doing it, more than the impossible standard of pure abstinence.

Milton Friedman goes to China
There’s a famous economics fable of Milton Friedman going to China (or India), and discovers them using men with shovels instead of earth moverrs to make a canal. When asked, they say it's to create jobs. Milton suggest using spoons instead. The point of the allegory is to show that less productivity is economic waste, and that politicians don't get economics.

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