Someone recommended an article by Niall Ferguson in the current issue of Foreign Affairs. Not being one to turn down an opportunity to avoid “real” work by reading things that I can fool myself into thinking are close enough to my field to count as “real” work, I strolled down to the local magazine shop. Since I am between residences and temporarily renting an apartment close to work, the local magazine shop is situated in what could accurately be described as a colourful neighbourhood. It also happens to be at the confluence of this (let’s not mince words) scuzziness and where the lawyers and doctors, architects and grad students get off the subway. Having never bought a copy of Foreign Affairs, I was curious to see how much it goes for (an absurd $12 and change it turns out). Not seeing it on the shelf, I innocently asked the woman behind the counter of the busy shop, “Do you carry a magazine called Foreign Affairs?” She stared back at me blankly. I repeated the question a little louder; a few people turned to look. Still nothing. Then she called to the back of the shop. Another woman emerged. They exchanged some incomprehensible whispers, then the second woman looked me over and marched toward the approximately 500 square feet of shelfspace devoted to porn. Oh no, I thought. She began shouting across the store, waving ever more hardcore publications in her chubby fist, “What kind of affairs you looking for, sir? This one? This one?” At that point, with everyone’s gaze fixed on me, trying to explain myself would probably only have made matters worse. So I just smiled meekly, thanked them for their help and went on my way, hoping the lawyers and doctors, architects and grad students know the difference between Foreign Affairs and Swank. I still haven’t read the Ferguson piece, but I’ll get to it this weekend, once I polish off some real work and find the thing online.
In the absence of anything very (or even marginally) insightful to say, I am going to plug a piece of software I discovered today that just seems, well, awesome. Booxter is going to change my life. Take a shelf full of books, a new Mac with built in iSight camera and away you go. Booxter works by scanning the barcode of your books, instantly providing you with all kinds useful and less useful bibliographic data. Best of all, export the entire library to BibTex (or html or whatever) at the click of a button. OK, enough cheerleading. I’ll return with something more bitter shortly.
He also has patents.
“You know, the Two Things. For every subject, there are really only two things you really need to know. Everything else is the application of those two things, or just not important.”
“Oh,” I said. “Okay, here are the Two Things about economics. One: Incentives matter. Two: There’s no such thing as a free lunch.”
I share Arnold’s misgivings, both regarding the meme and the particular application of it to economics. I can’t disagree with the ‘incentives matter’, although a determined pedant might say that this is reducible to simply ‘people do things for a reason’. It’s the ‘no such thing as a free lunch’ chestnut that bothers me.
The term free lunch first appeared in print on 23 November 1854, in Wide West published in San Francisco. It is a reference to the practice of saloons giving free meals to attract clientele. Of course the savings is illusory as the price of the drinks subsidizes the food. The exact phrase, there ain’t no such thing as a free lunch, is also first used in the city by the bay in the 1 June 1949 edition of the San Francisco News (although this is claimed to be a reprint of a 1938 editorial so it may be even older, but the original has not been found).
Economics is all about free lunches. They’re everywhere. Economic exchange only happens because of them. Bilateral transactions, whether they involve goods, money or labour, give each party a little free lunch. When I hand cash over to the nice person at my local tea shop, we are both snacking free-style. I am made better off than I would be were I to keep the money in my pocket; at a further remove, I am better off than I would be had I used the labour implicit to make my own scones. Similarly, the cashier is better off than if he’d stayed at home and grown cabbages.
The economy is not a closed system, at least not when it comes to utility. Unfortunately, the view of it as such is widespread, and informs every single bad economics article you’ll ever read. The Chinese are better off when they give us nicely-made strollers in return for I.O.U.’s in the form of hard currency, so surely we must be worse off? Mexicans seem happy to be here in Chicago, cooking my food and mowing my lawn; the little bastards must be stealing that happiness from somewhere. And as for Wal-Mart, that evil juggernaut must be hoovering the stuff up. CEO Lee Scott is probably smiling beatifically at this very moment, having harvested so much joy from the tears of the worker.
[Aside: that is not to say that particular networks of bilateral transactions don’t give bigger free lunches to some agents than others. Indigenous stroller artisans will temporarily have to be content with smaller free lunches for a while, now that the ricardo family has decided to increase someone else’s happiness. I just feel like neglecting distributional issues today.]
I take some solace from the fact that I’m in good company. If Larry can’t sleep and he still manages to produce, then who needs it? Well, to paraphrase the Senator from Texas, I’m no Larry David. Still, I suppose
2:53 am 2:56 am 3:04 am is as good a time as any to take up Ricardo’s challenge and give in to “the narcissistic urge to tell everybody what I’m thinking.” On the other hand, right now I’m not sure anybody really wants to know what I’m thinking. Am I all tapped out? Who knows? One thing is certain, Larry’s cure for insomnia is out of the question. Or at least, out of the realm of possibility. Just what kind of competition is Ricardo talking about?
So this warns one to keep an eye on posterity.
Bloggers tend to think, “Write about it now, worry about it later,” … What you write stays around forever …
Myopia is not my problem. On the contrary, the thought of posting something about which I’ll later be embarrassed is paralysing. Hopefully this blog will thrive on the tension between such paralysis and the narcissistic urge to tell everybody what I’m thinking.
That and a little healthy competition with that bastard Varnson.