Mister ECONOMY's
SEVEN RULES
- 1. Scarcity
- Our economic pie is limited. Because there's only so much stuff to go around and
everyone wants more than they have, what one gets, another doesn't. That means virtually
every good produced, every action taken has an opportunity cost.
- 2. Subjectivity
- Value is subjective. Prices are subjective. Everyone has their own likes and
dislikes and are willing to pay different prices for what they buy. From the sellers
side, prices are determined by production costs which depend on the subjective value of the
resources.
- 3. Inequality
- Life is unfair. Differences in natural abilities, acquired skills, individual effort,
political influence, and parental wealth mean that some have more income, wealth, and
control over resources than others. It frequently means that them that gots also gets.
- 4. Competition
- Competition is good. A competitive market is an efficient market. Competition among
buyers and sellers brings out the best in them and in our economy. Less competition among
sellers creates higher prices for buyers (and vice versa).
- 5. Imperfection
- Nothing is perfect and never will be. We can fix some problems, but we can't fix 'em
all. Markets have deficiencies that can be corrected only by government action.
Government flaws, though, is prone to prevent corrective actions and even worsen the
economic condition.
- 6. Ignorance
- No one knows everything. Information is a scarce commodity. Acquiring information,
like producing any good, entails the opportunity cost of limited resources. Those with
more resources can secure more information. Sellers, who have a good, usually have more
relevant information than buyers who want it.
- 7. Complexity
- There's more than meets the eye. Every action has many effects, some intended and
obvious, others unintended and more subtle. Any action that is good for one person is
likely to be bad for another. One's expense is another's income.
Copyright ©1996 Orley Amos |