Armchair Economist: Economics And Everyday Experience

published	March 1st 1995 by Free Press
binding	Paperback
isbn	0029177766 (isbn13: 9780029177761)
pages	251
description	Witty economists are about as easy to find as anorexic mezzo-sopranos, natty mujahedeen, and cheerful Philadelphians. But Steven E. Landsburg...is one...more [close] Witty economists are about as easy to find as anorexic mezzo-sopranos, natty mujahedeen, and cheerful Philadelphians. But Steven E. Landsburg...is one economist who fits the bill. In a wide-ranging, easily digested, unbelievably contrarian survey of everything from why popcorn at movie houses costs so much to why recycling may actually reduce the number of trees on the planet, the University of Rochester professor valiantly turns the discussion of vexing economic questions into an activity that ordinary people might enjoy. -- Joe Queenan, The Wall Street Journal The Armchair Economist is a wonderful little book, written by someone for whom English is a first (and beloved) language, and it contains not a single graph or equation...Landsburg presents fascinating concepts in a form easily accessible to noneconomists. -- Erik M. Jensen, The Cleveland Plain Dealer ...enormous fun from its opening page...Landsburg has done something extraordinary: He has expounded basic economic principles with wit and verve. -- Dan Seligman, Fortune [close]
date added	02-14-07 edit book

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Tony rated it:

03/02/08

Read in January, 2008

I have to give this book a three since I did learn something, although I really hold it in remarkable contempt. For the first time ever while reading an economics book, I felt like I understood the contempt held for the 'dismal science'.

I feel like delving into this a bit. The author makes a claim that taxes don't add value to a society, because what you take from Peter, you pay to Paul, and in a sense of absolute value, it is true. If I have a million millionaires, who each earn 10 million...more I have to give this book a three since I did learn something, although I really hold it in remarkable contempt. For the first time ever while reading an economics book, I felt like I understood the contempt held for the 'dismal science'.

I feel like delving into this a bit. The author makes a claim that taxes don't add value to a society, because what you take from Peter, you pay to Paul, and in a sense of absolute value, it is true. If I have a million millionaires, who each earn 10 million a year, and I tax 1 million from them and give it to the poor, I have not made my society richer in absolute monetary terms, but this completely ignores one of his other insightful claims.

In a previous example, when discussing logging, he claimed that the actual economic benefit of cutting down trees, has to not only take into consideration the positive economic impact for the company, loggers, etc., but it also must factor in the emotional cost to the environmentalist who is upset about loosing said trees. Critically, and I must give credit where credit is due, the economist in question recognizes that labour is not valuable in and of itself, but the fruits of said labour are. So if I work my ass off and buy an Ipod, it is my enjoyment out of the purchase which is the true reward...this is what I work for. Hopefully, what I spend my money on brings me some form of satisfaction.

Now this is critical because this explains the real monetary value of walking along the beach. Non-economists might gag that this activity has a value, but it does. I could have done anything with my time, like work, but I chose to spend it in this particular manner, and that is worth something. So if enjoying nature means something, there could theoretically be a dollar value attached. In fact, there often is. My friend Judy owns a fat pad in Marin county (which she got for a song from a person shortly thereafter indited for international drug smuggling...but that story is for another time :-) Anyway, you would be hard pressed to find someone who loves nature more...for walking in it...swimming in it...and merely knowing it exists. But it does have a value. I don't know the number, but I would imagine that if a suitably ludicrous offer was made for 40 acres in Marin, that love of nature could be quantified. This insight, the fact that value must be attached, as hard as it may be, to non nuts-and-bolts numbers is true....and valuable...and then completely ignored as evident by the aforementioned millionaires example.

So lets look at those folk again. Let us say, that we tax the million millionaires earning 10 million dollars a year at 100,000 dollars annually. In actual dollar transfers, no one is richer or poorer. The big wage earners have lost 1% of their salary, and now there are 100,000,000,000 floating about to disperse to the poor. So lets play with my imaginary (but inspired from the book example) and up this tax to 5%, leaving our society, in the form of taxation from these sole 1 million millionaires 500 BILLION dollars to play with. Now, recognizing the principle of the need to weigh emotional benefits and costs with any economic plan, (accepting the complete dollar exchange equality) 1 million people have suffered. Now, how much they have suffered is hard to quantify. They have been taxed at 5%, and that is real. There may be an extra cottage in Aspen un-purchased, a Mazzerati (sp) undriven, or some classy couture unworn. Now, to say that the tax generated no value is to assume that the net emotional worth/perception of the 500 Billion to the poor is equal to the ennui suffered from the mega-wealthy, knowing that they have had a small percentage of their earnings accosted. So what emotive benefits do our poor people gain from this. That list is extensive, so how about we focus on the emotive benefit of what the wealthy gain from giving.

While some might wish they had an extra 10 Ferragamo shoes to wear, I am guessing others feel happy that the poor are better off. If nothing else, seeing poor people beg around you does have a tendency to be a wee bit depressing. Oh yeah, and when people are less desperate, they tend to not commit crimes...a portion of which maybe (just maybe) directed at the aforementioned wealthy....so maybe rich people might enjoy not living with constant security and behind gated fences....they may like having competent servants....rich people do have to interact with poor people, even if the later only serve them, and maybe they would like them to be able to do simple sums (only in terms of effective service mind you :-)...which they are likely to learn in school. Oh...and health care...poor people can spread infectious diseases...but not so likely if they have health care and last I checked rich people don't like dysentery either....and rich people might like the emotional value of living in a stable society unlikely to suffer from a despotic overthrow....also less likely in a country with people not at the mere level of starvation. Still think taxes don't produce anything Mr Economist? And I haven't even gotten to the benefits the poor might feel not living in the gutter....less

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Armchair Economist: Economics And Everyday Experience

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