The Economists' Diet: Two Formerly Obese Economists Find the Formula for Losing Weight and Keeping It Off by Christopher Payne PhD

Author:Christopher Payne PhD [Payne PhD, Christopher]
Language: eng
Format: epub
Publisher: Hay House UK Ltd
Published: 2018-01-01T23:00:00+00:00

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Look at this another way. Next time you’re offered an enticing deal, we want you to stop for a second and consider whether the deal reflects good entrepreneurialism or just a bad attempt to increase sales by getting you to eat more of the same unhealthy stuff. While we have no particular issue with the former, even though it may be fattening, we have no hesitation in refusing the latter. Let us explain.

As usual, there is no better starting point in any discussion of economics than Adam Smith’s The Wealth of Nations. In particular, Smith’s tale of the baker, brewer, and butcher, acting in a free market economy, provides an explanation for why we sell to one another and why, generally speaking, the benefits of selling more accrue to all.

The parable takes place in a small village where the residents decide they want to get ahold of some of the local baker’s scrumptious bread. They figure they have two choices: they can go to the baker and plead for the bread in the hope that his benevolence toward his neighbors overpowers his commercial concerns; or they can appeal to the baker’s self-interest by figuring out what he might be willing to accept in exchange for some of his loaves.

For instance, one villager, who knows how much the baker enjoys the occasional pint, may elect to use his knowledge of brewing beer to set up a brewery so he can exchange stouts and ales for some sourdough and rye. Another villager, brought up in the art of butchery, may opt to become a professional butcher and exchange some choice cuts of meat for the baker’s bread. By appealing to one another’s self-interests in this way, the villagers create a bustling economy full of budding little businesses all selling goods and services to one another.

It’s a lovely tale with a happy ending: the invisible hand of the free market makes life better and generates more wealth for everyone. And, contrary to common (mis)perceptions, Smith was not proposing that we let greed drive our economy. The father of economics believed that humans are inherently charitable toward one another; that part of what makes us human is our ability to empathize with people other than ourselves. In a small village setting, our baker would likely give bread to those in need. But Smith also realized that the baker needed things he couldn’t provide for himself—such as beer and meat—and by exchanging these goods for bread, the brewer and butcher simply made sure that everyone’s needs were met. A happy side effect of the innate propensity of humans to exchange was an increase in the total production—and therefore wealth—of the village as a whole.

Smith’s tale was an optimistic one about the potential for never-ending growth. Human ingenuity, combined with a propensity to “truck, barter, and exchange” would lead to the increased specialization of work (butcher, baker, brewer, tailor, blacksmith, tanner, and so on), enabling everyone to consume more. The economy needn’t be a zero-sum game in which one person could consume more only because another person was consuming less.

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