The newest, and last, of the Learn Liberty videos I did in March 2012. I like the way this one turned out, because it captures something everybody cares about. Free t-shirts!
UPDATE: One of the comments, on Youtube, was this: "This guy looks like Patrick!" (Which is true. I lost 40 pounds not long after filming this video. Pretty strange to look back at...)
UPDATE: Okay, the above is an exaggeration. You CAN, in fact, "give money away." Here is a looping gif of the Ben Bernank as a young fellow, proving the point.
But in my own small way, I
am glad to be one of the judge's of the Economics Music Video
Contest sponsored by Edward Stringham at Fayetteville State University.
Last year's contest on "Supply and Demand" was a blast and we'll have a
new contest "Economic Value is Subjective" this year.
Stringham
writes: The goal is to encourage students to make videos that convey
economic concepts in an interesting way. The first year’s contest asked
students to make videos on Supply and Demand and the theme of this
year’s contest is: “Economic Value is Subjective.”
Watch (seriously, watch!) the growing list of current entries at:
"Karl Menger had an idea long ago. That value's different to people, therefore subjective, yo!" Now, THAT is poetry, economics fans! The
contest is open to all students and entries are due May 15, 2013. The
winners gets $2,500 and the professor of the winner gets $500.
TP: Dear Dr. Munger, I enjoyed your video, "What Do Prices “Know” That You Don’t?" The title reminds me of something that Bill
Gates said to me. I created the prediction markets project within
Microsoft in 2003 and I was asked to brief Bill on them. He immediately
understood how prediction market prices work and then said that the
reason they might help him was because [paraphrased], "If the market
prices differ from my own beliefs, then either they know something that I
don't know or I know something they don't know, and either of those may
need remedy." Cheers, TP
MM: That's very cool, and an interesting difference between economists and
entrepreneurs. I assume you know the joke about the economist and the
entrepreneur. Economist and entrepreneur are walking down a street in San Francisco. The entrepreneur sees a $100 bill, and generously
offers to split the “found” value with the economist. The economist refuses, saying that it’s not
possible. “After all,” the economist
announces, if there had been a $100 bill in the street, someone would have
picked it up. In equilibrium, there are
no arbitrage profit opportunities!” The
entrepreneur shakes his head in scorn and pockets the full $100.
So, the economist sticks to the first part of your formulation. For the
economist, "they" always know everything, and that's embodied in
price. But entrepreneurs know that prices are wrong, often, sometimes by a lot.
That means the entrep's pick up the $100, and the economist turns out
to be right after all. But only because smart people go around looking
for wrong prices.
UPDATE: Scott Ainsworth writes....A
story from Georgia - When walking with economists in front of the
econ/business buildings on the Georgia campus, I noted that there was a
lot of money lying around the ground - pennies and dimes mostly. The
obligatory equilibrium jokes followed. One of
the economists said that picking up pennies was not worth his
opportunity costs. I admitted that I still picked pennies up. More than
one person looked askance at me - until I stated that I was the shortest
person in the group. Opportunity costs survived and equilibrium was
restored. For the economists, it was a very big day - and I was 23 cents
wealthier.
The folks at Learn Liberty (and I do mean the lovely Elisabeth McCaffrey, among others), are SO great at taking a pretty bland idea and doing something wonderful with it. This turned out WAY better than I had any right to expect. I have ALWAYS wanted to blow up into a cloud of colored smoke at the end of a video. It hurt, but only a little.
(UPDATE: Since people have asked, "Al Trewis" is an altruist, not someone for whom all is true. That would have been clever, since if everything is true, nothing is. But I'm not that deep. He's just an altruist.)
(UPDATE II: A number of people have said, "But you didn't talk about ____!" Especially farm subsidies that distort prices. Well, first, yes I did. I mentioned that the subsidy for ethanol was cut, and that that changed things. And second, it's a four minute video. The number of things I did NOT talk about is essentially infinite.)
For more then 30 years, I have heard Angus call himself "Betty." (Nope, no more details. Just trust me here.)
So, in honor of Angus, I made a video about externalities in which Betty figures prominently. I am not a very attractive man, but it turns out I am a genuinely repulsive woman.
A credit: I had never recognized the centrality of manners, and "moral" social norms in controlling externalities. But my main man Russ Roberts pointed it out in editing this piece, and then doing this podcast, years ago. So, a big post Festival of Lights shout out to RR: when I say "Manners," I always think of YOU, big man!
UPDATE: Sam Wilson, yes, of COURSE the model for Art is the Dub-MOE. I even tried to get that vacant Pooh-bear expression down. As for Carl....well, a guy needs SOME secrets.
UPDATE II: I don't mean to claim there is anything intellectually novel here, folks. My good friend John Nye had a very nice piece, years ago, that makes the "knowledge problem" point way better in print. And this recent post by Steven Landsburg did a nice job summarizing the issues, and the problems, of an arbitrary "starting point." Oh, and Mario Rizzo, too. I could go on, but the point is that I am sumarizing what a lot of people already know, but rarely gets taught when the subject of externalities comes up in basic micro courses.
