Sunday, April 16, 2017

Ideas That Teach Economics: A Progress Report

In two previous posts I described my current project to put together a collection of works of literature that teach economics. Inspired in part by comments to those posts, I now have almost half a book's worth and am looking for more. Here is the current list, not necessarily in what will be the final order:

From Imitations of Horace by Alexander Pope

"Margin of Profit" by Poul Anderson

"The Peace of Dives" by Rudyard Kipling

"The Cambist and Lord Iron" by Daniel Abraham

"The Jigsaw Man" by Larry Niven

“The Verger” by Somerset Maugham

A Petition by Frédéric Bastiat

George Orwell, A Review of The Road to Serfdom and The Mirror of the Past

I am considering adding, at Peter Leeson's suggestion,  

"The Judgement of Solomon." 
It is a well known story but provides a simple illustration of a preference revealing mechanism, although arguably a flawed one.

With a little commentary by me, this would come to about 40,000 words. I am aiming at at least twice that, preferably a little more.

A few comments on what I want:

1. The idea is to teach economic ideas. Economics, to me, isn't the study of the economy, it is the approach to understanding behavior that starts from the assumption that individuals have objectives and tend to take the actions that best achieve them. So the fact that a story describes events in the economy, such as inflation or unemployment, is neither a necessary nor a sufficient condition. 

2. I am looking for works that teach economics, not works that support my (libertarian, pro-free market) political views. 

3. I am looking for works that are good enough literature to be read as such. A story written by an economist to teach economics, such as Hazlitt's Time Will Run Backwards or Murder at the Margin by Marshall Jevons, does not qualify unless it is a good enough story to have survived on its literary merit alone. Ideally, this would be a collection that could be read for pleasure by someone uninterested in economics as well as being used as supplementary reading for discussion in an economics course.

4. I don't want excerpts that read as excerpts. The piece by Alexander Pope is part of a longer work but reads on its own as a complete poem.

As I mentioned in an earlier post, there is a somewhat similar project published in 2003, The Literary Book of Economics by Michael Watt. It is where I discovered the Pope poem, but so far that is the only thing I have found in it that I would want to use. It is not a book that I can easily imagine anyone reading all of for fun, although there are some interesting bits in it.

Suggestions can either be put as comments here or emailed to me.


Anonymous said...

Would you consider drama? A good piece would be Act I of Faust II by Goethe in which Mephistopheles persuades the Emperor to introduce paper money to rescue the finances of the empire. The entire act would be too long for sure, but it might be cut without becoming incomprehensible. I only know the original German version, don't know if there is a good English translation.

Unknown said...

The Ransom of Red Chief ;)

Anonymous said...

Maybe The Dark Lord's Answer?

Mike Hammock said...
This comment has been removed by the author.
Mike Hammock said...

I read "The Dane-geld" to my Intermediate Macro students when I discussed time inconsistency and rules vs. discretion.

Seth said...

Looking at the previous posts I don't see that Vinge's The Ungoverned has been suggested. Its economic idea is similar to one you've already got: to persuade someone not to do something you don't need to make it impossible, just more expensive than they're willing to pay. It might be too long though, at around 16,000 words.

TheVidra said...

Would a short story qualify, if it focuses on how different interest groups try to get government funds/regulations by appealing to feelings and moral superiority rather than self interest? A "think of the children" argument from over 100 years ago? Google translate might give the gist of this, but I can look for a translation or do it myself, it is quite funny (and applicable to the 21st century US political discourse, even though it was written in 19th century Romania):

This author/playwright had many insights applicable to most western societies even today.

Unknown said...


I'm fond of that story, for obvious reasons, but I don't think the ideas are mostly economic, except in a sense even broader than I am aiming for.

The Vidra: If there is a translation out there I would be interested in looking at it--it's hard to tell from your description if it would work or not.

TheVidra said...

Below is a hasty translation I did just now; even if it doesn't fill your needs, I hope it is still mildly entertaining (not one of Caragiale's better works). There is some depth to it which might be lost on non-Romanian readers (critique of nationalist tones, of verbal tics and incoherent arguments, criticism of the media; based on thorough reading of Caragiale's works, I assume the "Romanian citizen" bit was in there on purpose to show how Jewish businessmen were subtly excluded from certain aspects of public life, etc; very subtle stuff).

The Initiative

"We're in bad shape, very bad shape! The government doesn't even want to think about it! There is no support; we can go as far as to call it persecution. And this - allow me to say it - is sad, not just for us, farmers, who are not so selfish as to go there; it's sad for the country, because, in the end, those of us who pull the plow, if I may say it, we're bare bones; those of us who've been devastated..."
"Nobody," I reply, "has devastated you."
"Please, don't interrupt me, let me finish. We do the heavy lifting in this country, which, without us, where would it be? We can't just sit around, whistling and twiddling our thumbs, and have the government's coffers fill up; and then have so many leeches come to suckle at its teat, out in the open or hidden, I'm talking about those who live supported by us, who, heavens help us, only we know what we go through. No, Sir! Until the government comes up with a law, it's not going to work! The government needs to consider this seriously."
This is what my friend, Mr. Stasache, one of our prominent large scale farmers, was spouting in an irritated tone.
I, not being very knowledgeable of agricultural policy, simply replied with a question:
"Mr. Stasache, wouldn't it be possible to leave the government out of this, and try to make things better through - how shall I call it - through private initiative?"
But my friend was becoming more peeved.
"Ah! So you mean to say, you are one of those 'private initiative' people? I'm so happy for you. Thanks for your help."
"Sorry, Mr. Stasache, to be honest, I don't know the situation, and..."
"Well, if you don't understand the situation," he replied even more peeved, "why do you speak out? All of you speak out without understanding the situation... no, Sir, not us; not me and you; the government must - do you understand?"
"I understand. So I, as a journalist, I mean to say, must immediately start an energetic effort to make the government finally begin considering..."
"Start it! this is your duty as impartial journalists, if you truly live up to your lofty mission; you must not forget that God endowed you with a pen, which is a weapon; therefore, you must have strong ideals for this country, which otherwise would perish... and if you listen to me, this is what you must get across: the government must consider this seriously!"
I left Stasache, solemnly swearing that I had never considered my pen as anything other than a weapon, and that I would begin the effort immediately. As I was thinking of how to tackle the project, I ran into a prominent dramatic actor, a man full of self-confidence, so full of it that none was left for anyone else in the room. 1/3

TheVidra said...

"Our national theater and our dramatic literature have ended up in very bad shape, my man, very bad...the government doesn't want to take this seriously! There is no support; we can go as far as to call it persecution. And this - allow me to say it - is sad, not just for us, actors, who are not so selfish as to go there - although we are, whatever they may say, completely disregarded, despite the constant declarations that a country without culture is worthless. And it's very true: you can't compete with European culture, which marches ahead with giant steps, only with grains and vegetables; or even petrol. You also have to show your mentality; and I believe that art and literature are the highest manifestations of a nation's mentality; because, in the end, you don't show yourself in public belly-first or with your lower organs, but with your forehead, that mechanism of sublime thought, which turns man into the king of creation. And what is being done for our nation's art and literature? Nothing! It's sad! We need more theaters... The the government must consider this seriously!"
I listened very attentively to the entire tirade, and only when I was fully convinced that it was indeed over, I replied,
"In any case, if you need, if you really need more theaters, that could be done through private initiative."
"You are one of those 'private initiative' people? Congratulations! Stop peddling those trifles, Sir, private initiative. This is where the government needs to consider things!"
"My friend," I replied, "I understand that, as a journalist, you mean none other than for me to start an effort so that the government can finally begin considering..."
"Start it, my man! And you especially have a moral duty, as a journalist, and a former stage prompter, so you understand the pain and you carry a noble spade, which is your pen... and this is what you must insinuate, that the government must consider this seriously!"
I left the prominent actor determined to begin the effort... but first I needed to establish with whom I'd start - Mr. Stasache or his prominence? It's true, the plow wielder had asked first; it's true indeed, but the actor had the more pressing cause. The national art and literature issue was in need of a more urgent solution. But as soon as I began, Mr. Caracudi, the reporter, who always finds things out a few minutes before they happen, came by to share some news of interest to me, meant to cheer me up due to my past as a former stage prompter: any day now, a new bill would be introduced in the Chamber of Deputies to reorganize the state theater. Here is a summary of the proposed law:
A drama company will be set up in every township, of course proportional to the respective population, and will receive a large enough subsidy from both the town hall and the national government for the advancement of Romanian art and dramatic literature.
The company will be led by a director named by the department, and a board composed of five members, as follows: the local mayor or a delegate thereof; one prominent businessman and one prominent industrialist (Romanian citizens); one licensed secondary school professor, chosen at random in the presence of the other board members; and the oldest Orthodox priest from the town; however, for county capitals, the archpriest would fill this role, regardless of his age.
I was overjoyed! Victory! One fewer campaigns! Now I had to deal with the plow wielders. Where's my weapon? Let's begin! Just then, my friend Mitica walked in, very peeved, 2/3

TheVidra said...

"Mon cher, we are in bad shape! Very bad! it's deplorable and ridiculous at the same time! And this time, allow me to say it, it's sad not only for us as parents, although it is somewhat painful, you can't deny it! To have to expose your child at such a young age, after all, a parent can have more children; and I'm not saying it out of selfishness; but it's sad for the entire country, to see your child at the mercy of a wet-nurse! For, imagine that a child's life - our daughter, Sisilica, for example - is endangered because of her; because the doctor said that we didn't pay close enough attention, and that her milk is not good, it doesn't provide enough nutrients, our child not having fully developed her gastric juices; and of course we are desperate, since our only hope is the baby bottle, since she's only six months old! And that wretched lady! She had no more patience, if only our baby had been four months older, we could have weaned her. Do you understand?"
"How can I not understand, if I've been through it? Child, nurse, I know! It's difficult!"
"And the government," continued the parent while getting more annoyed, "folds its arms, and doesn't want to address this seriously, when we are dealing with a matter affecting the entire country, mowing down so many children, called in to give their blood sacrifice... it's a grand matter, this nursing issue! It's no laughing matter!"
"Dear Mitica," I say, "I understand your annoyance very well; but I think in this case, a little private initiative would help..."
"Aaah, you mean to say that you, along with our nurse, are one of those 'private initiative' people? Bravo! No, man, enough with this private initiative, we've seen its sad consequences! No! The government needs to take things into consideration, and in any case, to take the initiative; it's a shame! We are parents..."
"In that case, we should sustain an effort through the press..."
"Sustain it, my man! This is your sacred duty, for you journalists, if you really are journalists, not trifling men..."
"Ah, Mitica!"
"No," he shouted with peak annoyance, "the government must do it! Imagine this! A wet-nurse who's out of milk! Great! And the government, indifferent... and the milk... her milk..."
And the distressed parent left, probably to look for a baby bottle.
Let's see: with the theater, I was done. I had two campaigns, with which one do I start?
Of course agriculture should be our first priority, as a predominantly agricultural country; however, because of this, I ask myself: what can an agricultural country do without a workforce? In that case, we obviously have to think about the population issue; as a result, I'll leave Mr. Stasache aside for the time being, and start with the wet-nurse matter. Brace yourself!
"A vital matter for our country... the issue of nursing... What shall we do with our citizens, tomorrow's soldiers? Until when shall we tolerate the government's reprehensible indifference, its criminal neutrality? Until when shall the Romanian child... the milk... etc." 3/3

Anonymous said...

I would suggest O. Henry's "The Gift of the Magi." On one (superficial) level, it shows how resources get misappropriated when one puts another's interest ahead of his/her own. On another level, it shows that effective and credible communication (which is certainly in one's self-interest) requires opportunity cost.

Paul Brinkley said...

Cory Doctorow spends a fair bit of time talking about one possible post-scarcity society in Down and Out in the Magic Kingdom, which many might find interesting. His ideas seemed all right to me; if they aren't, then they might serve to illustrate how people think about economics, at least.

And, it's free.

albatross said...

I'm sure they're too long, but two books occur to me that have economics as important themes.

Vinge's _A Deepness in the Sky_ has, as the background to the immediate story, an empire of trade and communications and shared language/technology spread across many star systems, with only sublight travel via ramscoop possible.

L Neil Smith's _Pallas_ follows an entrepreneur along a long life of inventing things and building up a business, all the while aiming at poltiical goals. It also deals to some extent with public goods (though in a way that's specific to the story).

Power Child said...

Mostly unrelated, but I have a question about storytelling:

David, as an experienced storyteller, how do you come up with details to make plot devices work?

For example, suppose you're writing a story where, for your plot to make sense, an army must successfully lay siege to a castle using some ingenious approach. How do you think up that ingenious approach? Do you simply invent something you think is cool and then backfill with plausible details, or do you brainstorm a lot of approaches and then pick the one that seems most plausible while still being cool? Or some other method?

Wirkman Virkkala said...

L. E. Modesitt, Jr., wrote, as his first short story, “The Great American Economy,” which is a very Analog-y story about inflation, monetary control in a tightly regulated economy, credit money, etc. I doubt if I would use it to explain Economics, but...

It is the first story in Viewpoints Critical (2008; 2009).

David Friedman said...

Power Child:

As it happens, in my first novel my protagonist had to figure out how to take three castles at three different points in the story. I don't remember working through lots of possibilities. In all three cases the solution involved tricking the defenders into letting people allied to my protagonist in the gate, in one case disguised as hunters driving a wagon with a dead deer on it as supplies for the castle, in two cases disguised as people allied with the defenders being chased by people on the other side. Once the gate was jammed open the rest of the attackers could get in.

In each case, the stratagem was probably suggested by something a little earlier in the plot. The supposed hunters were the people who had been spying on the castle for my protagonist's side, so the defenders were used to their arriving with game. In the other two cases, my protagonist's forces had just defeated a force on the other side, providing them with the material to disguise their advance force.

One castle was also taken by the antagonist's side from my protagonist's allies. That was a siege operation conducted by superior forces along general Roman+medieval lines.

In my second novel, no castles were taken.

Power Child said...

Thanks David.

I wasn't literally looking for ideas related to storming castles. The story I'm telling--or trying to tell--is set mostly in space thousands of years from now and has nothing to do with castles. Rather, I was wondering if you have advice on the best method of coming up with believable, compelling particulars for those kinds of complex plot events.

You mentioned letting earlier parts of the plot suggest what should happen. What if the thing happens right at the beginning of the story?

Ben Skelton said...

See my article for the New Welsh Review:

Also, Margaret Atwood's non-fiction book about debt, Payback, argues pretty convincingly that the whole of the 19th century novel is about debt.

And Ezra Pound's Cantos are supposed to be an attack on compound interest/usury.

John Saunders said...

Perhaps it says more about the economist (as modeller) than economics per se, but this short (600 word) story of mine comes to mind:

It's about a man developing ever more complex models as a guide to action.

David Friedman said...


Interesting essay, although I would have to read a lot in the books you mentioned to have a hope of finding something useful for my purposes.

It's amusing to see poets, on the one hand, talking about the nobility of poetry vs crass economics:"‘The essence of poetry is its passionate loyalty to individual human beings,’ he says. ‘Global capitalism has no interest whatever in individual human beings except as mercantile atoms in a huge structure to its advantage.’"

And then poets complaining that the problem with the economic crisis is that it makes it harder for them to be paid for poetry readings.

So far as the idea that poetry cannot deal with economic topics as generally defined (not the same thing as economics in the sense I am looking for), I offer as a counterexample my favorite Kipling poem, "The Mary Gloster." It's a Browning monologue, I think better than any of Browning's, and the speaker is a self-made shipping magnate on his deathbed, talking to his worthless son. In part about how he made his fortune.

Eric said...

David, I know of old that you're fond of "The Mary Gloster" and I wonder why it's not on the list.

David Friedman said...


It's my favorite Kipling poem, and has my favorite quote on first mover advantages, but I don't think reading it gives the reader much additional understanding of the logic of economics. But I'm willing to be persuaded.

eric_harris_76 said...

There's some economics stuff in Heinlein, but I don't recall any short stories that would work for your purposes. "The Roads Much Roll" might.

Or an extract from _Time Enough for Love_, "The Tale of the Twins Who Weren't", if it's short enough and affordable enough and appropriate enough.

In interstellar trade, money acquired in one place has to be spent before departure, because it won't be useful on other worlds and is apt to become worthless or expired when the ship returns.

There is also an accounting lesson regarding investing in cargo, which may qualify.

Eric said...

Hmmm...on rereading "The Mary Gloster", I see what you mean. The father's experience is all about creaive responses to ecomic constraints, but the poem doesn't teach much.

Unknown said...

Magic, Inc. by Robert Heinlein delightfully shows how political markets work under crony capitalism. My recollection is there is economic content as well as ideology there.

Robert D. Coli, MD said...

If 2,000-word blog postings might qualify, I believe each of these three by Jeffery Tucker are literary works “good enough to be read as such” that explain the fascinating story of the history and economics of monetary and payment systems in the context of the recent global cryptocurrency phenomenon. (4/1/13) (3/25/14) (12/31/16)