Sunday, July 22, 2007

The Economics and Public Choice of Harry Potter

Megan McArdle has this interesting point about opportunity costs in the Harry Potter series. The (un)fortunate habit with economists is that they are forever looking for economics in everything. I used to think it happens only to people like Pete and Fred who have been in economics forever, but then I was rudely awoken when I found myself unconsciously applying my economic knowledge to every little thing in my life, when I am shopping, during a recent midlife crisis and while reading Harry Potter. The first four Potter books were plain fun to me. I love fantasy and since JKR follows a Tolkien style narrative it was easy cozying up with a Potter book all night. All that changed with the Order of the Phoenix. Here the plot became very economic to me. It was all about bureaucratic interference and the public choice arguments surrounding it. Bottom line, when the government interferes in education it screws it up. It also clarifies that when there is a shortage of something a black market always springs up. Dumbledore's Army or the DA was a black market of sorts. There was a demand for learning and using magic spells at Hogwarts, and since there was shortage of the same due to regulation, an entrepreneur (Hermione Granger) came along and took advantage of the situation to start a club to learn magic secretly. The power of vested interests also comes out. Fudge's aim was to keep his post and so he mistakenly believed that Dumbledore was after the Ministry and refused to believe the truth about U-No-Hu.

U-No-Hu had a single purpose and since he was like a one man planning commission he planned everything to be in power and become immortal. His band of followers were terrified to bring in any new ideas both because they were afraid of his power and also because they believed that he had tested the limits of magic and knew everything. (the latter is how economies perceive of planning commissions, a bunch of highly intelligent and widely read individuals) However, if he had used non-coercive means to discover the knowledge in the market he would have discovered the secrets behind more powerful magic. The single minded pursuit of immortality blinded him to everything else. Any of us would have told him that he suffered from the knowledge problem. duh!! Sure he had all the information, but he did not know all the subtle stuff which makes up knowledge. He was like a super computer that processed all the data but missed the real stuff. Come to think of it, the whole series reeks of the knowledge problem. Needs more thought!! More on the knowledge problem later.


Brian said...

The economics of Harry Potter. Love it! (Admittedly I never read the series nor seen the movies.)

P.S. I couldn't find your email, but I posted mine in my reply to your comment.

Mike G said...

Hah! Love it. I'm almost convinced to read the series.