♪ [music] ♪

- [Tyler] Back to ideas 
of two words --

opportunity cost, 
another central economic idea.

Even when something good happens,
there's a tradeoff, right?

Sometimes I think 
this is more important

than "incentives matter."

I'm torn, incentives matter,
opportunity cost, tradeoffs --

I don't know --

but it's in the top three 
or four ideas of economics.

It doesn't mean you shouldn't 
make an investment,

but it does suggest
always look at what is the cost.

Do the best you can.

What is the tradeoff involved?

This actually relates back 
to my point

about not always knowing.

Because if you're considering 
a choice -- what school to go to,

whether you should marry,

whether you should buy 
ping pong balls,

where to take your next vacation --

you're giving up something else.

You generally don't see 
in any direct way

what it is you're giving up.

So there's an element 
of built-in agnosticism here.

Of course, you have 
to make a choice.

You should use the evidence 
and reasoning as best you can.

But we don't always know.

An implication 
of tradeoffs everywhere

is you're comparing a seen
to an unseen,

and you should not always be 
totally completely confident

in your ability to know 
what the unseen is like.

So any policy you favor --
republican, democrat,

progressive, libertarian, left, 
right, whatever, conservative --

I think the main point is not 
to be for or against it,

but to be able to spell out
like under what conditions

would my idea be a bad idea?

And that's a bit of a stretch,

but if you can teach 
your students that.

I'm not saying they can 
always do it off the bat,

but simply that they should aspire
to be able to do this:

"I have some idea 
under what conditions

is my idea a bad idea."

And if they are asking that question
in an earnest, honest way,

I think in policy, in politics, 
in their lives, whatever,

in education, they will make
better decisions.

Not, "Here's the big pile 
of reasons why I know I'm right" --

We're actually, mostly pretty good
at doing that.

We're like biologically 
trained to do it --

but the... "here are the conditions
where I would be wrong."

The Great Wall of China --
was it a good idea?

Well, it protected China
against invasion from the North,

except, of course, 
as you probably know,

invasion from the North came anyway.

The Great Wall of China, 
I am told it is 4,160 miles.

At its peak,
800,000 people worked on it.

It's the longest 
and biggest wall ever built.

By one estimate 
it contains 4 billion bricks.

It took two millennia --
not 2 years, not 200 years --

two millennia to build.

It has the weight equal 
to 8 million elephants.

And according
to one internet estimate,

which I do not believe at all --

I've no idea how they converted 
money across time --

but it cost, over two millennia,
$360 billion.

I've no idea what that means.

But if you think 
about the Great Wall,

it had some benefits;
it had an opportunity cost.

Always think about 
what are the tradeoffs.

If you put on a tariff, you may 
create some jobs in one place,

but you're going 
to lose jobs somewhere else.

♪ [music] ♪

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