you don’t have, and macroeconomics is about money the government is out of. These two concerns seem hopelessly meshed in real life, and therefore I’ve tangled them together in this book. Economists also make a distinction—for no good reason I can figure— between “inputs” and “outputs.” Inputs are the jobs, resources, and money we use in order to make the outputs we want, such as money, resources, and jobs. All outputs, even shit, heartbreak, and enormous illegal profits, turn out to be inputs: manure, movie plots, and capital investment in video-poker machines in Tirana. Two additional unimportant economic terms are “supply” and “demand.” Scarcity has already explained these. There’s lots of demand and not much supply. Economists measure supply and demand with curves on graphs. When the supply curve goes up, the demand curve goes down. But how true is this? Do I get less hungry because I know I have a freezerful of pizza? My experience with the microwave at 2 A . M . argues otherwise. And can we really know how much people want something? The kid “really, really, really” wants a snowboard. Does he really want it? Or after three times falling on his butt at Mt. Barntop, is he going to leave the thing propped in the carport for the next twenty years? As for the supply curve, the concept of efficiency shows us that we don’t know how many snowboards can be produced, or how cheaply, and if we wait until next winter, they may be giving them out free with Burrito Supremes. So far, from an examination of the basic principles of economics, we’ve learned that things are scarce. We knew that. Fortunately the less-basic principles of economics are more interesting. Ten Less-Basic Principles of Economics 1. The Market Is Never Wrong . A thing is worth what people will give for it, and it isn’t worth anything else. If you have some shares of Apple Computer and you go into the NASDAQ market offering those shares for $1,000 apiece, you may be brilliant. Apple stock may be worth $1,000, easy. And all the NASDAQ customers may be idiots for buying Apple at a mere thirty dollars.††† A Macintosh is a much better computer than an IBM PC. But, smart as you are and dumb as everybody else is, the market says your shares didn’t sell. And the market is right.
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