by The Quotidian
A new book examines the real price we pay to have consumer goods at relatively low cost – but offers few ideas to get us out of the mess.
One of the joys of an undergraduate economics education is the feeling that comes over you during your first or second year of having been inducted into a secret society – a sort of Harry Potter world with its own language, its own subculture, and its own special selection of intellectual tools. These are almost like little magic spells that allow you to see the world in a different way: as a world of hidden relations and counterintuitive mechanisms, a world that the Muggles can’t see though it’s right there in front of them.
Of course, this feeling is illusory, and soon fades – not just because real economics is a bit messier than the introductory stuff, but also because just about anyone can learn these basic tools and easily apply them to journalistic effect.
For example, take the concept of externalities. Freshman economics students discover that only some small subset of the costs and benefits of a transaction are explicitly reflected in the price. Read the rest of this entry »