Economic Lessons in Game of Thrones
A new series starts with Tyrion and Daenerys teaching us lessons
What are the economic lessons we can learn from Game of Thrones and House of the Dragon? We will examine different economic lessons each week during season 2 of House of the Dragon’s release this summer through these posts and through the corresponding YouTube videos. (Linked at the bottom.)
Positive Economics vs. Normative Economics
We start by looking at the concept of normative economics with Tyrion Lannister. Tyrion explains to Hizdahr zo Loraq why he doesn't approve of the fighting pit. Hizdahr retorts: "What great thing has ever been accomplished without killing or cruelty?" Tyrion retorts “It’s easy to confuse what is with what ought to be”.
This is a great example of the difference between positive and normative economics. Positive economics involves statements of fact. Examples:
The unemployment rate is 3.9%.
The inflation rate is above 3%.
Positive statements are statements of what is - not a statement of opinion. Hizdahr asks a question in the form a positive statement when implying that great things require cruelty.
Normative economics involve statements of opinion or judgement. Tyrion makes this distinction when he describes what "ought to be." Some examples of normative economic statements are someone who says the US should lower (or increase) the minimum wage, that we ought to raise (or lower) taxes.
It is important to separate positive vs. normative analysis in economics, and most analysis in introductory economics is, and should be, positive. (Do you see what I did there?)
Creative Destruction
Creative destruction refers to the idea that innovation benefits society but often results in old industries or systems being destroyed. In the clip we see that Daenerys has a dragon - which is one new innovation relative to what others have, and it is a powerful war machine. We also see how Bronn has a new tool designed to destroy the dragon.
While this clip shows actual things that destroy, many innovations have destroyed industries. We could list dozens of examples, but three recent ones include:
Digital cameras harming the traditional camera/film industry.
Smart phones doing the same to companies that focused only on digital cameras.
Streaming services destroying Blockbuster and video rental industry.
Amazon and other online retailers putting Toys R’ Us out of business.
These innovations harmed come companies and some workers, but provided great benefits for society in terms of productivity gains and increased standards of living.
For More, Watch the Video
Recent Susquehanna graduate (and soon to be Clemson Ph.D. student) Dan Bragen and I met to discuss these concepts in greater detail in this video. Dan and I are collaborators in creating the Economics of the Game of Thrones website, so check that out as well for more clips.