I’m sensitive to concerns about the downsides of inequality. And I’ve certainly met my share of Econ 101 robots, who can’t talk beyond the “markets are always right” models one gets in early economics classes. But the thing to note is that the natural human impulse is to recoil from unfairness, and it requires the exercise of intellectual faculties to get that the fair solution may also be an inefficient solution.
That’s why Econ 101 is valuable. One has to learn to question one’s intuition. That doesn’t mean one must always ignore one’s intuition. But it’s nice to have the intellectual framework to evaluate it properly.
To be clear: Econ 101 is not the only tool to have in one’s intellectual framework – a healthy mix of psychology, history, physical science, biology, and anthropology would be valuable complements, and a little philosophy and poetry, too.
ADDENDUM: Nathanial Dempsey, stay curious, weighs in on James Kwak’s post. Sample: “In other words, there is no perfect way to allocate scarce resources. Everything has inequality and inefficiency effects. The pricing mechanism in capitalism is just the best system we’ve got until we come up with something better.”