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© 2012 Sanjeev Sabhlok's revolutionary blog
There are many "laws" of economics (although rarely are they called by such a name).
The following two "laws", in my view, summarise the essence of the economic way of thinking:
Iron Law No. 1: THERE IS NO FREE LUNCH
Iron Law No. 2: INCENTIVES DRIVE BEHAVIOUR
If the people of India (and of the world) manage somehow to understand just these TWO "laws", India (and the world) will transform into a much happier and wealthier place.
I would even argue that these "laws" are FAR more powerful than the Golden Rule itself ("do unto others as you would have them do unto you"). The Golden Rule is frequently violated (including in the long run). These two laws, however, can never be violated during extended interaction.
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Understand just this: The two iron laws of #economics http://t.co/RlmXCBdS #philosophy
Nice articles. You're a highlight today at our Twitter of the http://www.LibertarianInternational.org non-partisan Libertarian International Organization
Thanks Ralph. Much appreciated. Just noting the twitter URL: http://twitter.com/#!/sabhlok/status/147294382524084224 of your retweet. I’m glad there are large number of people now across the world who are speaking out against oppressive governments.
Dear Sabhlok,
I think you should add the 3rd Iron Law of economics as: And behaviour is bound by accountability and responsibility.
I know it is implicit. But unless it is made explicit there is much chance for the mischief. And those who oppose 'liberty' will get a boost quoting this mischief, I think so much.
Sanjeev–
If you don’t mind I would like to recast your laws in the following form
Law #1 — Incentives Matter aka Incentives Drive Behaviour
Law #2 — Unintended consequences matter. Corollary: TANSTAFFL
Law #3 — Prices are Information. Corollary: Governent interference in the market distorts prices and thus distorts/destroys information.
Stolen shamelessly from the post and comments at http://econlog.econlib.org/archives/2011/09/the_best_thing.html
Thanks, Ramesh and PD
No doubt all your suggestions are valid.
Ramesh
behaviour is bound by accountability and responsibility
This is, in my view, a corollary of “there is no free lunch”.
PD
Unintended consequences matter.
This is subsumed under law 1 (there is no free lunch). The absence of free lunch is because of these unintended consequences.
Finally: Prices are Information
That is a subset of the second law (incentives drive behaviour). Prices [in the broader sense] contain information about incentives, and drive behaviour.
I’ll include these corollaries accordingly, as part of the main laws.