No Free Lunch: Economics for a Fallen World: Third Edition, Revised

Chapter Two: Fundamentals of Economic Behavior 55 IT’S A WRAP! You should now understand the basic principles which guide economic activity, and it’s time to put them to work! Living in a fallen world of scarcity means we have to choose, and choosing means the setting aside of some possibilities in order to gain others. Acting man imagines the future, assessing possible plans that could improve his situation by subjectively evaluating opportunity costs and benefits of each possible action. His expectations are guided by the institutional arrangements that he faces, helping to reduce what the economist John Maynard Keynes called the “dark forces of time and ignorance which envelop our future.” As Adam Smith suggested, our natural propensity to “truck, barter and exchange” becomes the basis for mutually beneficial gains from trade. In this world, production can increasingly specialize through the division of labor, leading to increasing overall production. These mutually beneficial exchanges are governed by the laws of supply and demand, which we’ll study in chapters three and four. These models are the heart of the science of economics, so dive on in! GAINS FROM TRADE AND SPECIALIZATION IN GENESIS? Can you think of an example of trading in the Bible that illustrates the principles we’ve seen in our text? Can you think of opportunities to trade that were missed? If the theoretical results we show here were not seen, can you think about why it did not work out the way we’ve illustrated? Here are just a few examples that you should read and think about: • Cain and Abel –– What if Cain had traded with Abel? • Abraham’s negotiation for a burial plot for SarahThe Israelites in Egypt (contrast the Israelite shepherds with Egyptian farmers) • Jacob’s work for Laban in Genesis 29 –– Did both parties benefit from the exchange? –– If so, why were Laban and his sons upset? • Joseph’s management skills vs. his brothers shepherding skills How does sin distort the perceptions and expectations of social cooperation? Corn (bushels) Wheat (bushels) Jamal 2,000 5,000 Sydney 6,000 2,000 Total 8,000 7,000 Table 2.2, Autarky (no trade) Corn (bushels) Wheat (bushels) Jamal 6,000 5,000 Sydney 6,000 5,000 Total 12,000 10,000 Table 2.3, Cooperative Trade