Chapter 20
Ten Economic Ideas to Hold Dear
IN THIS CHAPTER
Understanding ten fundamental economic principles
Arming yourself against the economic follies of politicians, the media, and others
In this chapter, I list ten economic ideas that every informed person should understand and be ready to use to evaluate the policy proposals that politicians, pundits, and the media make. Some of these ideas aren’t true in all situations, but because they’re usually correct, be wary if some someone wants you to believe that they don’t apply to a particular situation. Chances are that they’re wrong.
Self-Interest Can Improve Society
The idea that self-interest can improve society is basically Adam Smith’s famous invisible hand. If all economic transactions in a society are voluntary for all the parties involved, then the only transactions that will take place are those in which all parties feel that they’re being made better off. This concept doesn’t mean that charitable acts are bad for society. Rather, it means that even philanthropy is generated by self-interest: People give because they enjoy helping others, so both givers and the people they help are better off. In addition, this concept motivates entrepreneurs to find ways to produce products you like at prices you like. Sellers must ...
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