I will probably return to this after I get through the latest book — as of this posting, I’m at around page 100. Anyhow, my reaction to this article by Megan McArdle was thuburptttt. She complains that the economics in Harry Potter is all wrong because there is no convincing explanation of the supply of magical powers; namely, why they are scarce. She forgets that (a) ability clearly plays a big role and (b) study helps too. McArdle points to the poverty of the Weasleys. Why not just create their way out of that? But given that there is an active productive economy, it should be pretty clear that they can’t just make anything. Indeed, I struggled to think of an example of that. What is more, there is a great deal of inherited wealth. Finally, what economy there is is riddled (if you’ll pardon the pun) with regulation and peppered with monopolies. What is more the wizard folk seem happy with that. Hagrid tells us in the first book that there is only one bank and that is the way it should be.
Now the issue of scarcity comes up in this stuff all of the time. I remember making a McArdle-like point to Ken Arrow many years ago in relation to Star Trek. I pointed out that replicator technology had rendered the economy mute. He corrected me and said that that couldn’t be true because there was only one Enterprise. So there had to be inherent scarcity. I learnt my lesson; there is always scarcity, you only have to know where to look.