… is from page 5 of the third edition (2015) of my colleagues Tyler Cowen’s and Alex Tabarrok’s principles-of-microeconomics textbook, Modern Principles: Microeconomics (original emphasis):
People cheered when, in the 1990s, Speaker of the House Newt Gingrich advocated mandatory executions for drug dealers. But economists wondered by Gingrich wanted to decrease the penalty for murder. How does the death penalty for drug dealers decrease the penalty for murder? Think about it this way: Suppose that Gingrich’s bill becomes law and the police bust into an apartment where three drug dealers have hidden their stash. What happens? The drug dealers know that if they give up, they will be put to death. So why not try to kill the police? If the dealers are lucky, they get away. If the dealers are unlucky, they are no worse off than if they didn’t fight because when drug dealing is a capital offense, drug dealers face no additional penalty for murder.
This passage is from the opening chapter of Tyler’s and Alex’s intro-economics text. It is the text that I assign (along with some other readings that I send to my students electronically) to the 328 students who this semester are taking my ECON 103 class at George Mason University (“Principles of Microeconomics”). This class meets every Tuesday evening from 7:20 to 10:00pm. I absolutely love teaching principles of microeconomics. A well-taught micro-principles class will give an attentive and thoughtful student 75 to 80 percent of all that he or she needs to understand in order to think and to reason like a truly expert economist – and about 95 percent of all that he or she needs to see the errors of most of what is asserted by politicians and pundits who plead for more state control over people’s lives.
By the way, the passage quoted above offers an example of the importance of thinking at the margin. Thinking at the margin is much more crucial than it seems to non-economists when it is first explained to them. Only by thinking at the margin can we correctly understand, for example, why the wages of life-saving first-responders are lower than are the wages of NFL players and of Hollywood starlets and why this fact is a good thing for society. Only by thinking at the margin can we understand the error of those who assert that firms that have lots of money stashed away in reserve, or that are currently earning higher-than-normal profits, will respond to a hike in minimum wages simply by raising the pay of all of their affected workers. And only by thinking at the margin can we come close to fully understanding why there is no objectively correct minimum standard of drug safety, workplace safety, food safety, or of any other kind of safety.