1. Many desirable things are not feasible.
2. Individuals and communities face trade-offs.
3. Other people have more information about their abilities,
efforts and preferences than you do.
4. Everyone responds to incentives, including people you
want to help. That’s why social safety nets don’t work.
5. There are tradeoffs between equality and efficiency.
6. In an equilibrium of a game or an economy, people are
satisfied with their choices. It’s difficult for well-meaning outsiders to
change things.
7. You respond to incentives. Before making a promise, think
about whether you’ll keep it if circumstances change.
8. Governments and voters respond to incentives, too; they
sometimes default on promises made.
9. One generation can shift costs to subsequent ones.
10. When a government spends, citizens eventually pay.
11. Most people want other people to pay.
12. Because market prices aggregate traders’ information, it’s
difficult to forecast stock prices, interest and exchange rates. – Thomas
Sargent to the 2007 graduates at Cal-Berkley
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