Naked Economics: Undressing the Dismal Science (Fully Revised and Updated)

In short, government is like a surgeon’s scalpel: It is an intrusive tool that can be used for good or for ill. Wielded carefully and judiciously, it will facilitate the body’s remarkable ability to heal itself. In the wrong hands, or wielded overzealously with even the best of intentions, it can cause great harm.

Self-interest makes the world go around, a point that seems so obvious as to be silly.

Consider the following question posed by Amartya Sen, winner of the 1998 Nobel Prize in Economics.13 Three men have come to you looking for work. You have only one job to offer; the work cannot be divided among the three of them and they are all equally qualified. One of your goals is to make the world a better place by hiring the man who needs the

This idea has profound implications when it comes to something like organ donation. Spain, France, Norway, Israel, and many other countries have “opt-out” (or presumed consent) laws when it comes to organ donation. You are an organ donor unless you indicate otherwise, which you are free to do. (In contrast, the United States has an “opt-in” system,

The market is like evolution; it is an extraordinarily powerful force that derives its strength from rewarding the swift, the strong, and the smart.

Per capita income in the United States is higher than per capita income in France; the United States also has a higher proportion of children living in poverty.

the private costs of my behavior are different from the social costs.

In America, there is no central authority that tells stores what items to stock, as there was in the Soviet Union. Stores sell the products that people want to buy, and, in turn, companies produce items that stores want to stock. The Soviet economy failed in large part because government bureaucrats directed everything, from the number of bars of s

Consumers lose in two ways. First, their tax money is squandered when projects that never should have been funded in the first place go bust (or when the whole banking system needs to be bailed out because it is full of rotten, politically motivated loans). Second, the economy does not develop as quickly or efficiently as it might because credit (a