What is economics? Many will suggest that it is about goods and services. Others will say that it has to do with the stock market. Others will assert this is a field of study that tries to explain knowing tomorrow why things predicted yesterday did not come true today. The great economist Ludwig von Mises described it as “universally valid and absolutely and plainly human.” Put simply, it is a science that studies human action – the choices, needs, wants, and interactions among individuals. When economics is examined through this lens, it becomes a lot more accessible. More importantly, it sparks a curiosity that economics is all around us, from TV shows to films to sports.
In the smash-hit television series Seinfeld, Kenny Bania gives Jerry a brand-new Armani suit because it no longer fits him. Bania informs Jerry that he does not want anything in return for the outfit. However, it turns out that he wants Jerry to buy him a meal at an expensive restaurant. When Jerry takes him to Mendy’s, Bania only orders the soup and wants to delay his dinner to another time. Jerry disagrees and says that the soup is the meal they agreed upon – especially as he doesn’t like Bania and doesn’t wish to spend any more time with the man.
In the end, it was a case of one of the fundamental principles of economics: There ain’t no such thing as a free lunch – or a free suit. This means that you can never receive something for nothing. There is always a cost that must be paid.
The Treasure of the Sierra Madre: Value
One of the finest American pictures ever made, The Treasure of the Sierra Madre, offers a lesson in value. Howard, a main character in the film, argues that gold is expensive because of the labor that goes into mining it. This is the Marxian principle of The Labor Theory of Value.
But the value of goods and services actually comes from how much people are willing to pay for them. This is known as “subjective value.” Gold is expensive because it has many uses apart from placing it in a safe and staring at the shiny metal every five years or so. Computers, dentistry, medicine, industry, automobiles – there are many applications for gold. If nobody wanted it, you could mine gold for your entire existence and not make a penny.
Demand is critical. Without it, the supply would be worthless.
Baseball: The Division of Labor
Baseball is perhaps the greatest sport known to man, next to lying on your sofa and staring at the ceiling. It displays many economic concepts in action. One of the main ideas in baseball is the “division of labor,” the separation of tasks performed by people who specialize in a certain area. In baseball, you have nine position players. Some examples?
- The pitcher’s purpose is to ensure the batter does not reach base.
- The third baseman protects the infield corner.
- The outfielder prevents home runs or extra-base hits.
Like in the real world, you have players with their own unique duties and responsibilities in a diverse array of fields. A cook in a restaurant, a computer programmer at a software company, a farmer growing potatoes in Idaho, and a mechanic at a repair shop – everyone carries out a role in society.
Economics Is Everywhere
“It is no crime to be ignorant of economics,” noted economist Murray Rothbard, “which is, after all, a specialized discipline and one that most people consider to be a ‘dismal science.’ But it is totally irresponsible to have a loud and vociferous opinion on economic subjects while remaining in this state of ignorance.”
It has become common for the public to opine on economics without being familiar with the discipline. However, if people think about it, they are exposed to economic principles daily, in all kinds of places. The subject is a lot more than complex formulas, charts, and jargon. In pop culture, you can always dive deep into a haystack of celluloid and find a needle of economics.
You just need to look – and perhaps know what you are looking for in the first place.