… is from page 113 of Steven Landsburg’s 2018 book, Can You Outsmart an Economist?:
To say that it costs $100 to produce a particular bushel of wheat is to say that $100 worth of resources – land, labor, pesticides, fuel, and more – are exhausted in the process. In the long run, societies prosper by husbanding their resources. That is, societies prosper by minimizing production costs.
DBx: Yes. And particular resources are worth $100 only because when used in their best possible way the result is a contribution worth $100 to consumers – as revealed by people’s willingness to pay $100 for the results of this use of those resources.
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Protectionists and other skeptics of free markets routinely accuse economists of being unaware of the full range of human interests. “Economists’ focus on ‘efficiency’ and ‘cost’ causes them to miss the fact that human beings’ wants and needs aren’t limited to money and material things. Economists are silly.” Yet all such accusations reveal only that the protectionists and market-skeptics who make them don’t understand economics. Ultimately – as economists understand – all costs are non-monetary; costs are the subjectively felt or imagined satisfactions that humans forego by taking action A rather than action B.
And importantly, because our world is one of inescapable scarcity, our world is also one of inescapable costs. By “efficiency,” then, all economists mean is the human quest to achieve any particular goal at the lowest-possible cost – that is, by keeping to a minimum, in that quest, the exhaustion of the fewest amount of resources (including time) so that as many as possible resources remain available to satisfy other human desires (including taking leisure, contributing to churches and charitable causes, and living in preferred locales).
