Introduction - Krugman_Intro_001-004 12:41 PM Page 1 >...

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intro >> Introduction: The Ordinary Business of Life T S S UNDAY AFTERNOON IN THE SUMMER of 2003, and Route 1 in central New Jersey is a busy place. Thousands of people crowd the shopping malls that line the road for 20 miles, all the way from Trenton to New Brunswick. Most of the shoppers are cheerful—and why not? The stores in those malls offer an extraordi- nary range of choice; you can buy everything from sophisticated electronic equipment to fashionable clothes to organic carrots. There are probably 100,000 distinct items available The scene along Route 1 that summer day was, of course, perfectly ordinary—very much like the scene along hundreds of other stretches of road, all across America, that same afternoon. But the discipline of eco- nomics is mainly concerned with ordinary things. As the great nineteenth-century economist Alfred Marshall put it, economics is “a study of mankind in the ordinary busi- ness of life.” What can economics say about this “ordinary business”? Quite a lot, it turns ANY GIVEN SUNDAY I Robert Landau/Corbis Delivering the goods: the market economy in action out. What we’ll see in this book is that even familiar scenes of economic life pose some very important questions—questions that economics can help answer. Among these questions are: along that stretch of road. And most of these items are not luxury goods that only the rich can afford; they are products that millions of Americans can and do purchase every day. 1 Krugman_Intro_001-004 8/30/04 12:41 PM Page 1
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2 PART 1 WHAT IS ECONOMICS? The Invisible Hand That ordinary scene in central New Jersey would not have looked at all ordinary to an American from colonial times—say, one of the patriots who helped George Washington win the battle of Trenton in 1776. (At the time, Trenton was a small vil- lage with not a shopping mall in sight, and farms lined the unpaved road that would eventually become Route 1.) Imagine that you could transport an American from the colonial period forward in time to our own era. (Isn’t that the plot of a movie? Several, actually.) What would this time-traveler find amazing? Surely the most amazing thing would be the sheer prosperity of modern America— the range of goods and services that ordinary families can afford. Looking at all that wealth, our transplanted colonial would wonder, “How can I get some of that?” Or perhaps he would ask himself, “How can my society get some of that?” The answer is that to get this kind of prosperity, you need a well-functioning sys- tem for coordinating productive activities—the activities that create the goods and services people want and get them to the people who want them. That kind of system is what we mean when we talk about the economy . And economics is the study of economies, at the level both of individuals and of society as a whole. An economy succeeds to the extent that it, literally, delivers the goods. A time-
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Introduction - Krugman_Intro_001-004 12:41 PM Page 1 >...

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