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Quotation of the Day…

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… is from page 529 of Armen Alchian’s insightful November 1957 talk at the University of Chicago Law School entitled “The Economics of Power”; it is published for the first time as a chapter in The Collected Works of Armen A. Alchian (2006), Volume 1 [2] (“Choice and Cost Under Uncertainty”):

The temptation to conclude that the rich really have lower costs because extra dollars don’t mean as much to them must be resisted by the thought that if the rich also have so much in the world, extra gains to them don’t mean so much either.  The so-called trivial importance to them of a dollar is matched by the trivial importance to them of what they can get with a dollar.  If the psychological costs are low, so are the gains, for costs are nothing but forsaken gains.

Tom Palmer often recalls how, many years ago, he – a young man of very modest means – was bidding to buy a rare book.  Another of the bidders for this same book was Charles Koch, already a very wealthy man.  Tom won the bidding.  Alchian’s insight above helps to explain why.

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