Want to Feed the Multitudes?

The Institute for Faith, Work, and Economics recently featured a small slice from Mere Economics.

Here's a small slice of that small slice:

Scarcity constrains us, but there is a path toward greater abundance. Let’s illustrate a powerful idea with just a little arithmetic.

Suppose that in a day’s time, Peter could bake ten loaves or catch four fish. Not “and.” If he bakes ten loaves, he can’t catch four fish. If he catches four fish, he can’t bake ten loaves. For simplicity, assume he spends half his day baking loaves and half his day catching fish, which means he eats five loaves and two fish daily.

Now let’s imagine you meet Peter. Perhaps you didn’t get a great education and don’t have many skills. As a result, you can only bake two loaves or catch two fish in a day. If you spend half your day baking and half fishing, you eat one loaf and one fish daily.

A few things are clear here. First, Peter is better at both baking and fishing than you are. Peter would win a baking contest. He would win a fishing competition. Therefore, many assume Peter has nothing to gain from your existence but hold on: who would win a baking or fishing contest doesn’t matter. Who gives up the fewest fish to bake a loaf matters. The surprising conclusion: you can each get more fish and more bread by specializing and trading.

For the whole excerpt, go here.