American Consequences - January 2019


T rade is based on the but first described by 18th-century philosopher Adam Smith. Division of labor is common sense. Most economic principles are common sense. There is, however, one aspect of division of labor that requires a little uncommon sense to understand. Former White House Director of Economic Policy Todd Buchholz, in his excellent book New Ideas from Dead Economists (which has been cited more than once in this magazine) says, "An insolent natural scientist once asked a famous economist to name one economic rule that isn't either obvious or unimportant. The reply was, 'Ricardo's Law of Comparative Advantage.'" The English economist David Ricardo (1772-1823) postulated this: If you can do X better than you can do Z, and there's a second person who can do Z better than he can do X, but who can also do both X and Z better than you can, then an economy should n ot encourage that second person to do both things. You and he (and society as a whole) will benefit more if you each do what you do best. economic principle of division of labor, practiced since forever

JOHN GRISHAM AND JUSTIN BIEBER EACH SPEND EQUAL TIME WRITING AND COMPOSING Thrillers Songs BS Production John Grisham 50 + 25 = 75 Justin Bieber .5 + 2.5 = 3 TOTAL BS = 78 Let's stipulate, for the sake of example, that one legal thriller is equal to one pop song as a Benefit to Society, or "BS". (One thriller or one song = one unit of BS.) John Grisham is a better writer than Justin Bieber. (I suppose Bieber can read and write.) John Grisham is also (assuming he plays the comb and wax paper, or something) a better musician than Justin Bieber. Say John Grisham is 100 times the writer that Justin Bieber is, and say he is 10 times the musician. Then say that John Grisham can write 100 legal thrillers in a year (I bet he can) or compose 50 songs. Using simple arithmetic, this would mean that Justin Bieber could write either one thriller or compose five songs in the same period. If John Grisham spends 50% of his time scribbling predictable plots and 50% of his


January 2019

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