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Difficult Economics Lessons

rpm Wrote: Jul 11, 2012 4:04 PM
A corollary of Dr Williams, thoughtful as usual, article is that the simpler something is, the more "experts" there are and the harder it is to come to a decision. For instance, observe a group of people trying to decide where to go to lunch. If the decision is complex, the group will defer to the one that has the most knowledge, or is at least reputed to have the most knowledge. If you want to design a high rise building, most people will hand the work over to an architect. What color to paint it? Everyone has an opinion, many passionate. As CEO of the company, I always delegated decisions on things like color. Didn't have time to add yet another opinion. There were plenty of experts already.
One of the more difficult lessons to teach economics neophytes -- and, many times, trained economists -- is that economic theory cannot say anything definitive about subjective statements, such as what's better, good, bad or worse. Let's try a few examples to make the point.

Cabernet sauvignon wine is better than fume blanc. Turkey is better than pork. Matter in the solid state is better than the plasma state. Each of those statements begs the question: Where's the proof? With subjective statements such as those, disagreements can go on forever. It's simply a matter of personal opinion. One person's...