1832): “Supply creates its own demand.” More is better. Any increase in productivity in a society causes that society to get enough richer to buy the things that are produced. This works even in an economy as screwed up as Cuba’s. The Cuban authorities allowed limited free-market sales of food, and this increased food production. Despite the extreme poverty of Cubans, that food did not sit around unsold. 9. Everybody Gets Paid. People want to get something for what they do, although what they want to get may not be money—it may be sex or salvation or an opportunity to apply marxist theory to rock and roll. Everything is a business. This is the “public choice” theory of economics. One of its founders, James M. Buchanan, won the 1986 Nobel Prize in economics for his work on understanding politics as an economic activity. Politicians don’t measure profits in cash. The gain that they want is an increase in power. Thus the socialists of Sweden and Cuba are just as greedy as the pirates of Wall Street and Albania. In order to increase their “power income,” politicians have to pass more legislation, expand bureaucracies, and broaden the scope of government power. This power income is what the Swedish cabinet minister Marita Ulvskog was really talking about when she told me, “You have to give something to voters.” Of course, that something can be, if you like, measured in money— your money, the money that government costs you in taxes, deficits, or currency inflation. Anyway, a politician who claims he’s going to cut the size of government is saying he’s going to creep up on himself and steal his own wallet. 10. Everybody’s an Expert. Of all the principles of economics, the one that’s most important to making us richer (or more powerful or whatever) is specialization, or “division of labor.” Milton Friedman uses a pencil as an example.§§§ A pencil is a simple object, but there’s not a single person in the world who can make one. That person would need to be a miner to get the graphite, a chemical engineer to turn graphite into pencil lead, a lumberjack to cut the cedar trees, and a carpenter to shape the pencil casing. He’d need to know how to make yellow paint, how to spray it on, and how to make a paint sprayer. He’d have to go back to the mines to get the ore to make the metal for the thingy that holds the eraser, then build a smelter, a
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