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The Answer Is Transaction Costs

Michael Munger

"The real price of everything is the toil and trouble of acquiring it."  -Adam Smith (WoN, Bk I, Chapter 5)


In which the Knower of Important Things shows how transaction costs explain literally everything. Plus TWEJ,  and answers to letters.

If YOU have questions, submit them to our email at taitc.email@gmail.com 

There are two kinds of episodes here: 
1. For the most part, episodes June-August are weekly, short (<20 mins), and address a few topics. 
2. Episodes September-May are longer (1 hour), and monthly, with an interview with a guest.



Finally, a quick note:  This podcast is NOT for Stacy Hockett. He wanted you to know that.....

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  • 23 episodes
  • Avg 50 min
  • English

Episodes 23

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  • Nov 25, 2025 · 1 hr 15 min

    Adam Smith Episode 7: The Errors of Mercantilism--Bullion, Balances, and Bounties

    Send us Fan Mail Tracing out Adam Smith’s Book IV, chapters 1–6, to show how mercantilism mistakes money for wealth, how protection creates monopolies at home, and why free exchange raises real prosperity. Smith defends two narrow exceptions—defense and tax parity—while rejecting bounties and politicized treaties that entangle trade with war. • mercantile vs physiocratic systems and their influence • wealth as goods and industry, not specie • balance of trade as a “pestilent error” • make-or-buy logic and misallocation from tariffs • invisible hand clarified and limited • natural vs acquired advantages in specialization • two exceptions: national defense and tax parity on imports • drawbacks as refunds vs bounties as subsidies • corn bounties, higher home prices, cheaper foreign prices • specie hoards as dams that inevitably overflow • treaties of commerce, Methuen example, political risk • case for unilateral free trade over reciprocity Mentioned in the podcast: Laura Williams on Pineapples Pineapples in Sweden Oren Cass on Adam Smith Dan Klein's Law and Liberty piece on Oren Cass on Adam Smith If you have questions or comments, or want to suggest a future topic, email the show at taitc.email@gmail.com ! You can follow Mike Munger on Twitter at @mungowitz

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  • Oct 21, 2025 · 1 hr 16 min

    Adam Smith's Wealth of Nations Episode 6--Division of Land

    Send us Fan Mail We trace how Adam Smith solves a historical puzzle: why Europe’s path to prosperity inverted the “natural order,” and how commerce quietly dissolved feudal power to make room for liberty. The story follows incentives, from primogeniture and entail to charters, free towns, and the market’s “silent and insensible” revolution. institutions as congealed preferences and elite incentives why Smith’s natural order inverts in Europe the physiocrats’ growth model and Smith’s critique Solow’s technology vs North’s institutions vs McCloskey’s ideas Joel Mokyr's synthesis and improvement (written BEFORE he Nobel'ed!) feudal constraints primogeniture and entail suppressing agriculture towns as islands of order through charters and fixed rents the king–burgher alliance against barons merchants as improvers of land and capital risk-takers commerce introducing liberty and good government Smith’s “most important” passage and its modern relevance If you have questions or comments, or want to suggest a future topic, email the show at taitc.email@gmail.com ! You can follow Mike Munger on Twitter at @mungowitz

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  • Oct 14, 2025 · 55 min

    Little's Law: The Transaction Costs of (Re)Drawing Lines

    Send us Fan Mail A conversation with Andrew Wagner, production and manufacturing engineer, now in aerospace, but with experience also in the auto industry. We trace how transaction costs shape production, from Adam Smith’s pin factory to Toyota’s SMED, and why empowering workers and redesigning tools can raise quality while cutting cost. An aerospace manufacturing engineer joins us to unpack Little’s Law, line reconfiguration, and the culture that makes flexibility real. • division of labor limited by the extent of the market • sub shop and Chipotle as live line-balancing examples • Smith’s three productivity drivers applied to modern factories • Little’s Law guiding WIP, stations, and throughput • costly line changes and capacity planning in auto plants • meta-tools, CNC, and multi-operation automation • stamping dies, SMED, and Toyota’s flexibility edge • just-in-time, early error detection, and quality economics • U.S. responses: robotics, platforms, and Deming at Ford • NUMMI proof: same workforce, new system, better output • CAD parametrics, modular design, and clay by robot • structure by design: darts, curves, and manufacturability • specialization, ergonomics, turnover, and the $5 day • worker empowerment as applied Hayekian local knowledge • letter on bureaucracy, spending, and the social order book pick Some links: Workload modeling and "Little's Law" Little on Little's Law "Just In Time" inventory and manufacturing Edwards Deming's "14 Principles for Management" Book o'da'Month: Jacques Rueff, THE SOCIAL ORDER If you have questions or comments, or want to suggest a future topic, email the show at taitc.email@gmail.com ! You can follow Mike Munger on Twitter at @mungowitz

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Showing 21–23 of 23 episodes