Economics For The Citizen

In 2005, economist Walter Williams of George Mason University wrote ten short essays titled Economics For The Citizen, explaining basic economic concepts for those unfamiliar with them. These should be required reading for everyone. Especially politicians and other know-nothing busybodies who insist on telling people how to do their business. An excerpt –

The essence of exchange is the transfer of title. Here’s the essence of what happens when I buy a gallon of milk from my grocer. I tell him that I hold title to these three dollars and he holds title to the gallon of milk. Then, I offer: If you transfer your title to that gallon of milk, I will transfer title to these three dollars.

Whenever there’s voluntary exchange, the only clear conclusion that a third party can make is that both parties, in their opinion, perceived themselves as better off as a result of the exchange; otherwise, they wouldn’t have exchanged. I was free to keep my three dollars, and the grocer was free to keep his milk. If you think it’s obvious that both parties benefit from voluntary exchange, then how come we hear pronouncements about worker exploitation?

Say you offer me a wage of $2 an hour. I’m free to either accept or reject your offer. So what can be concluded if I’m seen working for you at $2 an hour? One clear conclusion is that I must have seen myself as being better off taking your offer than my next best alternative. All other alternatives were less valuable, or else why would I have accepted the $2 offer? How appropriate is it to say that you’re exploiting me when you’ve given me my best offer? Rather than using the term exploitation, you might say you wish I had more desirable alternatives.

While people might characterize $2 an hour as exploitation, they wouldn’t say the same about $50 an hour. Therefore, for the most part, when people use the term exploitation in reference to voluntary exchange, they simply disagree with the price. If we equate price disagreement with exploitation, then exploitation is everywhere. For example, I not only disagree with my salary, I also disagree with the prices of Gulfstream private jets.

By no means do I suggest that you purge your vocabulary of the term exploitation. It’s an emotionally valuable term to use to trick others, but in the process of tricking others, one need not trick himself.

Pass this along to any recent liberal arts graduates you might know.

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About nightskyradio

Random signals from nowhere in particular.

Posted on April 22, 2013, in Economic$, Liberty and tagged , . Bookmark the permalink. Leave a comment.

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