VISITORS TO INDIA over the past several decades have often remarked on the shoddy quality of many of its manufactured goods. How could a country with large numbers of talented engineers and business-people keep on reproducing, decade after decade, a more or less unchanged version of the British Morris motorcar from 1955? The answer beloved of liberal economists is simple: protection of the Indian car industry from international competition. The solution: remove protection.

IN 1982, SEVEN PEOPLE in the Chicago area died after taking Tylenol capsules laced with cyanide. Newspapers at the time wondered about the motives of the killer. A few looked for an economic motive for the crime and speculated that the killer was an investor in Johnson and Johnson, the manufacturer of the drug, who had sold his stock in the company short. According to this economic interpretation of the event, the deaths, the killer reasoned, would cause a sharp decline in the price of the stock, and, under these conditions, a short seller would turn a tidy profit by covering his sale with shares bought after the murders; while there was no direct evidence of any significant amount of short selling around the time of the crime, had a capital gain been the killer's motive, his actions would have been rational and, as result, easier for us to understand than if we were to suppose that he poisoned the capsules for no reason. In fact, one story carried the headline “Tylenol Murders Rational After All”.