Principles of economics, translated

Great, so the best-selling

economics

textbook in the country is by N. Gregory Mankiw. It is based on these 10

principles

of

economics

. Are here. I'm not going to read them for you, just take my word that you need a PhD in economics to understand them. Fortunately I have one... and I have taken it upon myself to translate these

principles

for the uninitiated. Let's start by separating them into the first seven principles, which are microeconomics, and the last three, which are macroeconomics... the difference, of course, is that microeconomists are people who are wrong about specific things... ...and Macroeconomists are bad at things in general.

All macroeconomic principles have exactly the same translation: "Blah, blah, blah." As proof I just have to remind you that macroeconomists have successfully predicted 9 of the last 5 recessions... ...and as further proof we can now increase a font size. As Einstein said: "Everything should be as simple as possible, if not simpler." Ok, back to microeconomics. The first, “People Face Tradeoffs.” Translation: "Elections are bad." This is a simple syllogism: trade-offs are bad; Every time you have a choice, you have a trade-off; therefore, elections are bad. If you don't understand that, look at Principle #2: "The cost of something is what you give up to get it." Translation: "The options are really bad." Let me give you a simple example of this.

Let's say someone offers you a Snickers bar that you value at $1. So your economic benefit in this case is the Snickers bar minus the cost of what you give up to get it, which is nothing... ...your economic benefit is $1. Now, someone offers you a choice between a Snickers bar, which you value at $1, and some M&Ms, which you value at $0.70. Now your economic profit is $1 minus $0.70: only $0.30. You begin to see why elections are bad. In fact, the worst possible situation would be if someone offered you the choice between a Snickers bar... and an identical Snickers bar.

Now, people without a background in economics might think that's no different than being offered a Snickers bar... ...but that kind of careless thinking will never get you a permanent job. Great, let's simplify this: elections are bad, really bad. If you don't understand why decisions are bad, you're probably stupid. Next principle: "Rational people think on the margin." Translation: "People are stupid." Now, it is immediately obvious to the most casual observer with the most narrow intelligence that people do not think outside the box. Nobody goes to a grocery store and says "I'm going to buy an orange, I'm going to buy another orange, I'm going to buy another orange." But if people don't think at the margin, and if, as Mankiw says, rational people do think at the margin... ...we come to a most unfortunate conclusion: people are not rational.

In other words, people are stupid. But do not fear yet for the fate of humanity. Take a look at the following principle: “People respond to incentives.” Now the dictionary says that "incentive" is a noun that means "something that influences action, synonymous 'motive'." So what Mankiw is saying here is that people are motivated by reasons... ...or they are influenced to act by things that influence them to act. Now, you might think this is a bit like saying tautologies are tautological, right? I mean, people would have to be pretty stupid not to be motivated by motives... ...or to be influenced into inaction by things that influence them into action, right?

But remember Principle number 3: "People are stupid." Hence the need for Principle 4 to convince us that "people are not that stupid." Great, simplifying again, let's move on to free trade, our favorite topic. Principle #5: "Trade can improve everyone's situation." Translation: "Trade can make everyone worse off." I have proof that will blow your mind about this fact. Here we go: Compare the following two statements. One is "Trade can make everyone better off" and the other is "Trade will make everyone better off." If you had to choose between them, there would be no competition, right? Statement number 2 is better. But Mankiw uses claim #1.

And there is only one explanation: claim #2 has to be wrong. In other words, trade can make some people worse off, and from there to “Trade can make everyone worse off” is just a hop, skip, and a jump. Some people apparently didn't like this deconstructive proof, or destructive proof, they wanted constructive proof... ...so I added this footnote with the details. Now look at the last two here, "Governments are stupid" and "Governments are not that stupid"... ...they follow immediately from Principle #5 and its translation. If trade can improve everyone's situation, why the hell do we need government? But if trade can make everyone worse off, we better have a government that stops people from trading.

Here are the principles of economics,

translated

. And there's my website, standupeconomist.com. Thanks for your time.