Sunday, July 15, 2007

Economics and Civics Lesson...

Tonka and Paco were fighting over the windows in the lego set.

Tonka wanted both. Paco wanted at least one.

I took one from Tonka and gave it to Paco (income redistribution).

Then, I told her.

"Look, there are a few ways to get the window from Paco.

  1. You can take it from him by force, but I won't allow that (system of laws enforced)
  2. You can ask him if he'll share it with you (charity and/or socialism)
  3. Or you can offer him a package of blocks that you have for which he will trade you."

She asked him to share. He said no.

She offered 1 block. He shook his head.

"Look, Tonka, it's a question of supply and demand and perceived value. There are plenty of blocks, but only 2 windows. You also place a very high value on having the window. Paco knows that. You're going to have to make a much better offer, give him some things he can really use (utility) and then see if he'll go for it."

Sure enough, she eventually put together a package that convinced him to part with the window.

Then, my budding merchants made three more trades.

A proud moment indeed.

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