When I taught econ 101, I would begin my semester with a discussion of auctions and the TV show “cash in the attic.” The idea was to first communicate that value doesn’t have to come from “creating” anything. It can come from rearranging the things we already have.

The items in an auction were always there but they were junk to one family and treasure to another. Rearranging the who had which item made the world a better place. This usually went over pretty well.

From there I tried to then convince them that indeed, value never comes from creating anything because everything that is, was already here. At best we can rearrange atoms into forms that are more useful to us – just like rearranging the stuff in the attic.

This was always a bit harder to get across. This video courtesy of Alex Tabarrok might have come in handy.

About these ads