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- [Tyler] Next general principle --
and if after my two words, "incentives matter,"
if you give me another three words
I'm going to say "gains from trade."
Key idea in economics.
It's how things happen.
It's why markets, at least when they work,
it's why they work well,
that there are gains from trade,
both parties benefit.
Maybe I give up my money,
and Walmart gives up its ping pong balls.
Indirectly, China is giving up those ping pong balls.
I would rather have the ping pong balls.
Walmart and China would rather have the money.
We're both better off.
Of course the story is not always that simple.
But the general point that within systems,
and I include communist systems,
but within systems of any kind there is a big incentive
for people to try to reap gains from trade,
to be better off is, again,
a centrally important economic insight.
So the food we buy and consume, the clothes we wear,
the homes we live in, the apartments we rent,
the cars we drive --
whatever it is in the commercial sphere --
if you want to try to unpack how does that market work,
you need to have centrally in your mind
this idea of gains from trade.
And one thing I've done as a kind of hobby
on my economics blog, "Marginal Revolution" --
for 15 years now, I've compiled instances
of people reaping gains from trade
that you wouldn't actually think exist.
And I call these "markets in everything."
If you go to the Search function of my blog,
and you just type in "markets in everything,"
you'll see a full list of hundreds of these examples.
Let me just give you a few that have popped up recently.
There is a plan in Japan to offer --
I think this is for the wealthy -- fake meteor showers.
That is, you send up a satellite with little pebbles,
and to celebrate a birthday, if you want --
it's not really fake, actually; it's a purchased meteor shower --
you can buy a meteor shower.
There's a company called Casper. They sell beds and sleepwear.
Probably a lot of you know them.
They're opening up a new service in New York,
in their New York store.
You can walk in and you can take a nap.
Forty-five minutes, $25.
Gains from trade, right?
They've shut it down now -- there was, in the Bay area
something called "monkey parking."
And that's an app where
when you're giving up your parking spot
the app puts you in touch with someone who wants to take it,
and you wait there till they arrive and they pay you $5.
[audience laughter]
Again, you don't have to think it's a good idea,
but if you're trying to understand the logic of why this happens
it's, again, gains from trade.
There's a market in something called a "surprise vacation."
You sign up, and they don't tell you where you're going to go,
but they make sure it's all taken care of for you.
And the vacation is a surprise.
But just the power of markets, for better or worse,
to try to bring about gains from trade.
And I think it's important to recognize
some of these cases, maybe many of these cases,
people will find morally or ethically objectionable.
So in an economic model,
allowing people to buy and sell kidneys
may be a good idea.
>From the point of view of people's morals or ethics
or maybe religious views, it may not be a good idea.
But I think studying economics,
one thing it does either for you, or to you --
I'm never sure what the right word is there --
I guess it does it to you.
But I think it makes people more sympathetic
to voluntary exchange,
even if we realize it can be problematic.
But non-economists very often will only see exploitation,
repugnance of the transaction,
immorality.
Economists, they may hesitate at the last moment
to approve or want to legalize it,
but they will indeed see gains from trade.
And that tends to push them
toward at least considering more of this to happen.
In China you can buy --
It's called a virtual reality death simulation.
They simulate your death
and put you through a virtual reality experience
of your own funeral
so you can see what it's going to be like.
Is that weird?
There's a dog clothing designer.
His best outfits go for $15,000.
Is that a wrong way to spend your money?
We're not going to address that here,
but some people think it is.
But, again, it's this idea of gains from trade.
Oh, last example --
Bloomberg, one of my employers --
they just ran a whole series called "Honeymoons for Billionaires,"
and all the different things that go on.
So, according to Bloomberg, a lot of billionaires,
when they go on honeymoons,
they invest thousands of dollars in having meat shipped around.
If they need kosher or halal meals, but they want to go somewhere
other than a country that will serve what it is they need,
and there will actually be a person who travels around with them
carrying the meat, getting the meat through customs,
preparing the meat and so on,
and that too is gains from trade.
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