James d. Gwartney

Footnotes
1. While the tendency to develop markets can be said to be almost a universal part of human nature, it is possible, if a society
tries hard enough, to remove them from normal human action. Consider the early days of post-communist transition (or even
of the Roman Catholic Church) when citizens were taught that items had an intrinsic value and would often refuse to sell for
less than that supposed “value” even if hunger resulted. 
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2. The most powerful waterfall in Europe, which lies in Iceland. 
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3. Philip K. Howard, The Death of Common Sense (New York: Random House, 1994): 3–5. 
↩ 
4. Country Gender Assessment for Ukraine 2016, The World Bank, 48:
http://documents.worldbank.org/curated/en/128891470822320083/pdf/107673-PUB-P156988-ADD-ISBN-PUBLIC-
SoltisBookENweb.pdf
. 
↩ 
5. See Charlotte Web, “Swedes now spend more on fun than on food: study,” The Local Sweden, September 30, 2009:
https://www.thelocal.se/20090930/22392
. 
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6. For example, if a corporation invests USD 100 million in buildings and equipment to produce a product, say shirts, it is
forgoing what it could have earned if these funds had been invested in other ways, such as producing motorcycles. The
corporation could have simply put the USD 100 million in the bank and let it draw interest at, say, a 5 percent rate. In a year’s
time, the interest earnings would sum to USD 5 million. This USD 5 million in forgone interest is an opportunity cost of the
activities of the corporation, but it will not be reflected on the firm’s accounting statement. Because of this omission,
accounting costs understate the opportunity costs of the resources utilized. Therefore, net income overstates profit. 
↩ 
7. See Parable of the broken window, Wikipedia (last edited June 2019):
https://en.wikipedia.org/wiki/Parable_of_the_broken_window
. 
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8. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, Volume II Glasgow Edition (Indianapolis:
Liberty Fund, Inc., [1776] 1981): 454. Also available at: 
http://www.econlib.org/library/Smith/smWN.html
. 
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9. F. A. Hayek, “The Use of Knowledge in Society,” American Economic Review 35 (September 1945): 519–530. 
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10. Henry Hazlitt, Economics in One Lesson (New Rochelle: Arlington House, 1979): 103. 
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11. See “SCIENCE WATCH: Seat Belts and Pedestrians.” The New York Times (June 18, 1985). Section C, 9:
https://www.nytimes.com/1985/06/18/science/science-watch-seat-belts-and-pedestrians.html
. 
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12. Luxembourg: Publications Office of the European Union, 2012. “The Common Agricultural Policy—A Story to be
Continued” 
http://doi.org/10.2762/35894
. 
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13. See Patrick Jomini, Pierre Boulanger, Xiao-guang Zhang, Catherine Costa, and Michelle Osborne, “The common
agricultural policy and the French, EU and global economies,” Groupe d’Économie Mondiale (GEM), (October 2009. Revised

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February 2, 2010): 
https://ecipe.org/wp-content/uploads/2014/12/Jomini_boulanger-
The_Common_Agricultural_policy_and_the_French.pdf
. 
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14. See Pierre Boulanger and Patrick Jomini, “Of the benefits to the EU of removing the Common Agricultural Policy”
Groupe d’Économie Mondiale (GEM), (November 19, 2009. Revised February 2, 2010): 
https://ecipe.org/wp-
content/uploads/2014/12/BoulangerJomini_removingCAP112009.pdf
. 
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15. This chart comes from a much larger project started by Hans Rosling and currently maintained by his son and daughter-in-
law. You can see many more such charts and create your own at 
https://www.gapminder.org
. 
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16. Robert E. Lucas Jr., “On the Mechanics of Economic Development,” Journal of Monetary Economics 22, No. 1 (1988): 3–
42. 
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17. The most widely used measure of total output and income is gross domestic product (GDP). Changes in GDP are also
widely used to measure the growth of an economy. 
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18. While a diverse set of factors influences growth and development, the modern view recognizes the central role of
institutions and policies. Leading contributors to the modern view include Nobel Laureate Douglass North, English economist
Peter Bauer, Daron Acemoglu of the Massachusetts Institute of Technology, and James Robinson of Harvard. See Peter T.
Bauer, Dissent on Development: Studies and Debates in Development Economics (Cambridge: Harvard University Press,
1972); D.C. North, Institutions, Institutional Change, and Economic Performance (Cambridge: Cambridge University Press,
1990); and Daron Acemoglu and James A. Robinson, Why Nations Fail: The Origins of Power, Prosperity, and Poverty (New
York: Crown, 2012). 
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19. See, for example, Randall K. Filer and Jan Hanousek, “Output Changes and Inflationary Bias in Transition,” Economic
Systems, Vol. 24, Issue 3. Available at: 
https://ideas.repec.org/p/wpa/wuwpma/0012010.html
. 
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20. Tom Bethell, The Noblest Triumph (New York: St. Martin’s Press, 1998): 10. 
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21. For additional information, see John McMillan, Reinventing the Bazaar: A Natural History of Markets (New York: W. W.
Norton, 2002): 94–101. As McMillan points out, real privatization would have been preferred. Nonetheless, the movement
toward private ownership was still “the biggest anti-poverty program the world has ever seen.” 
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22. For a discussion of buffaloes, see: Lueck, Dean “The Extermination and Conservation of the American Bison” in The