Chapter 33.
Policy Making

A trend is a trend is a trend. But the question is, will it bend? Will it alter its course through some unforeseen force and come to a premature end?

Sir Alec Cairncross

READ THIS CHAPTER IF YOU ARE CURIOUS ABOUT:

  • Moving targets
  • A policy of doing nothing
  • Constitutional economics
  • Split ends

PREVIEW

The economic words for buyer and seller are, as you know, "demander" and "supplier." The two flow together in markets. To understand markets you need to understand each of these-supply and demand-more deeply.

Begin with demand. Why do people buy the amounts they do? In particular, why are they willing to pay only a little for an essential item like water and so very much for an unnecessary item like diamonds? One answer comes from the economist's "Rule of Rational Life."