The Martian and the Economist: A Parable of Panaceas

On the rationality of economists and picking up $20 bills

Generated by DALL-E 2

(A Brazilian Portuguese translation is available on 80,000 hours Brazil)

An economist and an alien from Mars were walking down the street when the alien said, “look! A $20 bill!”

“Impossible,” said the economist. “If it was, someone would have already picked it up.”

The alien picked up the bill and unfolded it, revealing it was a cleverly disguised tract for an evangelical church.

“See what I mean?” said the economist, with only a hint of smug satisfaction.

“Wow, this could be even better!” said the alien. “It says here I can have ETERNAL LIFE and all I have to do is sincerely believe in Jesus Christ!”

“You don’t really believe that, do you?” said the economist, scoffing.

“I mean I’m not sure,” said the Alien, “but you have to admit it’s a heck of a payoff if it’s true, and the cost is very low if it’s false.”

“We call that ‘Pascal’s wager’”, said the economist, and the problem is it assumes the only god you are considering is the Christian god. What if the true god turns out to hate being worshiped and only admits atheists to heaven, and condemns Christians to hell?”

“That is possible I suppose, but your objection seems to assume that in the case that at least one god exists, we could know nothing a priori about that god’s characteristics, desires, and intentions. I suppose you take the beliefs of your fellow humans and the existence of popular world religions as constituting zero evidence towards what the characteristics of the divine might be?”

“Well, look, there’s more to it than that, sometimes religions contradict one another and–” the alien suddenly cut her off.

“Look! Another $20 bill!”

The economist sighed as the alien picked it up and unfolded it. “What is it this time?”

“Wow, this could be even better!” Said the alien. It says here I can have ETERNAL LIFE and all I have to do is agree to have my body frozen when I die!”

“You don’t really believe that, do you?” said the economist, scoffing.

“I mean I’m not sure, but you have to admit it’s a heck of a payoff if it’s true, and the cost is very low if it’s false.”

“Look, that technology is in its infancy, there’s almost no chance any of those companies will survive long enough to uphold their end of the bargain in the far future, and even if they did, the incentives make it unlikely they’ll follow through. You’re just throwing your heirs’ money away.”

The alien was about to respond, but instead cried, “Look! Another $20 bill!”

The economist waited as the alien unfolded it.

“Wow, this could be even better!” Said the alien. It says here I can have ETERNAL LIFE and all I have to do is hasten the singularity and agree to have my mind uploaded!”

“Okay, you definitely don’t want that one,” said the economist. “Have you read LENA? Actual mind uploading is likely to be a recipe for condemning your virtual mental copies to man-made hell.”

“I haven’t, but I’ll be sure to look into it… “

As the alien and the economist turned the corner, a mugger wearing a heavy trench coat accosted them.

“This is a stickup! Give me $20 or else.”

“Or else what?” asked the alien, curious.

“Or else I’ll torture an unfathomably large number of innocent highly intelligent beings for an unfathomably long time.”

“That seems pretty unlikely. You’re bluffing.” said the economist.

“I mean I probably am bluffing, but you can’t be sure, so you’d better just give me twenty bucks.” said the mugger. “You have to admit it’s a heck of a loss if it’s true, and the cost is very low if it’s false.”

Before the economist could reply, the alien smiled and handed the mugger one of the $20 bills and continued on down the street. As they turned the corner they heard the mugger gasp in excitement, “Wow! I can have ETERNAL LIFE!”

Just then the alien cried, “What’s this?” and excitedly picked up a one trillion dollar bill.

“Okay, there’s no way that is real.” Said the economist. “The United States doesn’t make bills that go that high.”

“What about that whole proposal to mint a trillion dollar coin to overcome the congressional debt ceiling limit you mentioned back when we were having lunch?” asked the alien.

“Does that look like a coin to you? That constitutional loophole only allows the president to order the Mint to strike a coin, not the Bureau of Printing and Engraving to print a treasury note. That’s definitely just another tract, but I have to admit I’m curious what this one is shilling for. What’s it say?”

“Well it’s not eternal life, but it's still pretty good. It says it has a way to increase GDP by as much as 26%, end the housing crisis, reduce unpopular and inefficient taxes, all the while discouraging unproductive economic behavior and promoting productive economic behavior.”

“Oh yeah, I’ve heard that before. That’s Georgism. It’s a pitch for land value taxes and other related policies. I’m sorry, but it’s another waste of time.”

“You think Georgism is wrong?”

“Oh no, I’m an economist. Pretty much every economist agrees the Georgists are right about their fundamental claims. It’s actually shocking how widespread the agreement is - Adam Smith, Milton Friedman, heck, even Paul Krugman and Thomas Piketty will grudgingly admit it if you corner them.”

“So your government should enact land value tax?”

“No, land just isn’t a big enough deal in the modern economy. That’s Krugman’s complaint.”

“Are you sure? There’s a URL here on this bill that links to a bunch of research on the subject, and according to this, land seems like a huge deal in the modern economy.”

“Even if that’s true, land values are hard to assess in practice. That was Friedrich Hayek’s objection - Henry George actually inspired him to go into economics in the first place, and he believed that if accurate assessments could actually be done the idea would work, but because it’s too hard to do in practice there’s no point.”

“So why not get better at assessing? Seems like low hanging fruit - or trillion dollar bills on the ground. Why not do some pilot studies? It seems like a heck of a payoff if it’s true and a low cost if it’s false.”

“Even if you could, you run into political problems. Homeowners are an extremely powerful voting bloc and if land value tax was politically tractable the policy would be widespread already.”

“Didn’t your people once live under a feudalist monarchy? Didn’t there used to be widespread slavery? Didn’t you cure smallpox and scurvy and other horrible diseases? Isn’t your history littered with advances that overcame seemingly intractable problems once your people decided they had the will to try?”

The economist sighed wearily. “It’s really tempting to believe that there’s such a thing as a magic bullet. One big lever you can pull and everything will be better. When you get older and wiser you learn that change can never be easy and you can only ever make small gradual steps forward, or tinker around the edges with tradeoffs.”

“You are suspicious of simple solutions actually working in reality?” posed the alien.

“I guess you could put it that way.”

“Didn’t your species just avoid a massive death toll on the level of the Spanish Flu by rapidly developing mRNA vaccines in an incredibly short amount of time? Seems like a magic bullet to me.”

“What are you talking about? The pandemic was a total disaster! The death count was astronomical! Our authorities totally dropped the ball! Humanity collectively failed!”

“Not from our perspective as Martians! We compared it to how you handled the Spanish Flu, which wasn’t very long ago as we reckon time, and GOLLY, you did so much better this time around. It wasn’t perfect, but there’s no comparing the two. It could have been SO much worse.”

“I see what you’re getting at,” said the economist, “but let’s get back to the point at hand. You just found out about Georgism five minutes ago, why are you so enthusiastic about it all of a sudden?”

“You misunderstand me,” said the alien. “I’m not enthusiastic, I’m confused.”

“Confused about what?”

“You seem to agree that Georgism works in theory, but not in practice, and yet your behavior is not consistent with what I expect of someone who holds those two beliefs.”

“What do you mean?”

“If you thought the theory had fundamental philosophical or moral flaws that would be the end of the matter. But you agree with it in theory. Your objection is that it doesn’t work in practice, for a variety of reasons. But how hard have you tried to disprove it?”

“Wait, now you want me to disprove it?”

“Of course! If there’s a trillion dollar bill on the ground, the potential upside is so huge that you expect someone to expend a LITTLE effort in disproving it before they just walk on past. Maybe everything the Georgists say is dumb and wrong, or maybe it’s smart and right but fundamentally unworkable for frustrating but true reasons. But given how huge the potential upside is, and how widespread the theoretical agreement is, I don’t understand why the top priority of every economist isn’t trying to test whether those practical obstacles can or can’t be overcome. It’s as if every moral philosopher in the world was in solid agreement that Jesus Christ is the Son of God and rose from the dead on the third day, but ALSO believed that praying and fasting and working out your salvation with fear and trembling was just like, too hard, man, so let’s all just be functionally agnostic instead.”

“Okay, I’ll bite. What about unintended consequences? Georgism could work in theory but make things worse in practice for reasons that are hard to predict.”

“That’s a good point!” Said the Alien. “So you should do some more research, then? Georgism seems to make a bunch of testable hypotheses, and doesn’t require a revolution to get started - it predicts that partial implementations of its policies should deliver partial results. That seems like something that can be tested at various scales so if something bad happens you can see that well before you try to scale it all the way up. And if political opposition is as strong as you say there’s no great risk of it being implemented overnight anywhere anyways.”

“True,” said the economist, “but you really have to consider why, if this theory is so great, it’s been more than a hundred years since it got started and seemingly went extinct until a bunch of overly online weirdos started getting obsessed with it.”

“So you’re saying,” said the alien, “That Georgism can’t be a trillion dollar bill, because if it was, someone would have picked it up already?”

“I mean, right?”

“I’m not so sure,” said the alien. “I read that your species once cured scurvy, and then forgot how for several decades. The cure for scurvy was a trillion dollar bill lying on the ground. It got picked up, then dropped again. There were good reasons for the confusion, but the point is, if nobody believes a) that the trillion dollar bill is real, and b) that they won’t actually be able to benefit from it even if it is, then we shouldn’t be surprised when nobody has picked it up yet. Which makes me wonder how many OTHER trillion dollars bills might still be lying on the ground.”

Just then the alien saw a shiny coin on the ground and was about to stoop to pick it up when the economist put her foot over the coin. “Don’t pick it up.” She said.

“Why not?” Said the alien.

“There’s a notorious TikTok creator in this area who glues coins to the ground. They wait for you to bend over and then they film you, superimposing farting sounds. They get millions of views and everyone laughs at you. Besides, there’s no coin that’s worth it. What’s the most it could be, 25 cents?”

“It could be foreign. The Norwegians have a 20 kroner coin, that’d be worth two dollars at current exchange rates.”

“I mean there’s also a very tiny chance that it’s actually an ancient Roman silver coin worth much more than that, but it’s almost certainly just a quarter or a nickel or a dime. We have very little reason to believe it’s worth more than a pittance. Our baseline evidence tells us to expect that it’s either glued to the ground, worthless, or both.”

“Actually, it could be worth a trillion dollars.” Said the Alien, pointing to an electronic billboard with a flashing chyron overhead.

BREAKING NEWS: PRESIDENT ORDERS MINT TO STRIKE TRILLION DOLLAR COIN, TREASURY SECRETARY FIRED AFTER DROPPING IT ON WAY TO WORK.

The economist checked her phone. “It’s true. The New York Times confirms the story, the coin was lost an hour ago. And I know for a fact the Secretary of the Treasury walks right across this street every day to work.”

“Has the coin been found yet?”

“No, the story was just updated 30 seconds ago with a statement from the White House saying it hasn’t been found. Also there’s a $10 billion reward for its safe return, which is an awesome deal as you’d never be able to fence the coin anyways.”

The economist locked eyes with the alien. “Look, don’t get your hopes up. A thousand people have already walked down this very street in the last hour. If this was really the coin, it would have almost certainly been picked up by now already.”

She carefully lifted her foot. But as she did, a sudden gust from a passing street sweeper swept the coin away. Her heart sank as she saw the coin roll into an open manhole, making a faint splash as it settled on the bottom.

“Oh well.” She sighed. “It was probably just a quarter.”

She was shocked to see the alien dart towards the manhole and deftly squeeze inside without a moment’s hesitation. She called down, “what are you doing?”

“What do you think? There’s a very real chance there’s a trillion dollar coin down here, and all I have to do is crawl around a sewer and find it! You have to admit it’s a heck of a payoff if it’s true, and a relatively low cost if it’s false.”

“But what if it’s just a stupid quarter?”

“That’s good too! Then I won’t be troubled with the nagging doubt for the rest of my life that I let a trillion dollar coin slip through my fingers because I wasn’t willing to get dirty crawling around in a sewer for five minutes.”

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Lars Doucet is the author of the upcoming book, Land is a Big Deal, which is a comprehensive introduction to Georgism and a survey of the empirical support for the theory. It will be published on October 15, 2022, and is currently available for pre-order.