Authored by Jeffrey A. Tucker via The Epoch Times,
Economic reality embeds many paradoxes, unexpected outcomes that go the opposite direction of what you might intuitively predict. The best example concerns a new innovation that seems to make more efficient use of existing resources. Intuition might suggest that the result will be less resource use but reality often goes in the other direction.
DimaBerlin/ShutterstockThis is called the Jevons Paradox and it is based on a famous debate over the steam engine which made coal power far more effective than ever before, leading to wide predictions that the coal industry would experience a dramatic pullback in production need. Economist Henry Jevons said the opposite: the demand for coal will soar precisely because each unit will become more valuable in the task it serves.
He was correct. The lesson applies in many areas of life. Sometimes that very thing we believe is endangered by an innovation that seems to nearly replace it prompts the very opposite: the original resource becomes more valuable than ever before.
Consider the problem of counterfeit luxury goods. We are talking about Nike tennis shoes, Gucci accessories, Louis Vuitton luggage and bags, Rolex watches, and so on. There is a massive global economy supported by fakes. There is simply no way that a single brand can possibly stamp them out. I've been to cities in Turkey where the real and fake stores sell identical looking products happily, happily but at wildly divergent prices.
Economists have
