The Economics of Barbecue Sauce

First off, let me apologize for my extended, and unexpected, hiatus.  Life got busy.  But enough of that, back to the post.

I love to cook.  Specifically, I make my own barbecue sauces.  There’s usually a molasses base, with ketchup, sugar, and other spices.  Combine the ingredients, simmer and mix them until they are well-blended, and boom: a sauce fit for a pig.  Interestingly enough, this is also a good metaphor for how wealth is created.

One of the toughest things for me as I studied economics in high school and college was overcoming the zero sum fallacy (that is, the idea that one person’s gain must come at another’s expense).  How could wealth be created?  It wasn’t until I began cooking that I really understood it.

Consider the aforementioned barbecue sauce.  It has many components to it.  Some would taste fine by themselves (like the ketchup), but others wouldn’t be so good alone (like the spices).  But by combining them, they create something new; new wealth was created by combining old inputs.  And, in many ways, this is how markets work: they take inputs (people’s labor, raw materials, knowledge), combine them together to create new outputs, which are then traded for other outputs!  The lives of all those involved get better (and, just as a good sauce enhances a pig roast, good outputs enhance all those around it).

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