The following conversation between my good friend Michael McKay and a friend of his illustrates that we all understand and use economic principles every day. In fact we could not function without understanding these basic economic principles. Pat Barron
The other day I was having coffee with a new friend, a retired businessman who customized luxury cars in California. I mentioned I had recently retired from owning an investment firm and had many years of study of economics, especially Austrian Economics.
As so many people I have met before him, he said, “I really don’t understand economics and always have been confused by it.”
To which I surprised him with, “Of course you understand economics; it is the thought process you use every day to deal with three things: Scarcity, Property and Relationships.”
His eyes got big and he said, “Whoa! Say that again.”
“OK”, I said and continued, “Everything in human life is organized around how we decide about three things: Scarcity, Property and Relationships.
“First let’s talk about Scarcity which you’ve known about all of your life – you notice when something is missing or about to be missing; it is how you decide when it’s time go to the grocery store, do your laundry or whether you should drive your car faster so not to be late for an appointment.
“Every human being is an expert in the decision process of Scarcity. It is something we all naturally do whenever we act and choose – which, by the way, we are doing all the time, every day, all day long.”
I smiled, “I could go on and on. You want more?”
“Sure.”, he smiled back.
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