Harry Potter and the Economic Segregation of Muggles

What if the Ministry of Magic just let people be free to do what they want, and wizards and Muggles lived together openly?

Harry Potter and the Sorcerer's Stone (or Philosopher's Stone, if you're British) became the most popular thing of all time in 1997, just in time for high-school me to think that anything everyone else loved so much was probably garbage.

A few years later, when the first movie came out, I remained unimpressed.

But unlike most shallow trends, JK Rowling's magnum opus kept getting bigger and bigger, and eventually, even friends whose opinions I respected started telling me I simply had to read the books.

Why are the wizarding society's politics and economics so backward?So sometime in the mid-2000s, I finally took their advice and listened to the first Harry Potter book on tape, as read by Stephen Fry.

It was great.

Over the next few weeks, I worked my way through every book in the series. I'm ashamed to admit that my own pride and snobbishness kept me from enjoying some really fantastic modern literature. Perhaps there's a good lesson there about iconoclasm run amok, but today, I am unabashedly a fan.

Rowling's characters and character relationships are real and believable, she filled her world with genuine danger and risk, the magic is extraordinary and Voldemort is – to be sure – one of the greatest villains in literary history.

But one thing that's always bothered me about Harry Potter is how confusingly backward the wizarding society's politics and economics actually are.

I'll have more to say about this in future videos, but for now I just want to focus on the fact that witches and wizards have – for centuries apparently – lived their entire existence hidden from the non-magic people, Muggles.

Isolating the Muggles

There are really only two reasons given for this secrecy. The first is that Muggles would be scared of wizards and witches and try to hunt them down or burn them at the stake. The second is that intermingling magic and non-magic people is just gross and Dark Wizards like Grindelwald or Voldemort would try to enslave them.

Essentially, the argument is that either magical people will have to fear pitchfork-wielding humans, or humans will have to fear racist magical people. And so, we must have permanent segregation.

What if wizards and Muggles were allowed to live together openly?And ok, fine: obviously some wizards are bad and try to enslave Muggles throughout the series. But legally enforced segregation didn't actually stop Death Eaters from killing tons of people in London, so the law clearly didn't protect anyone there.

Likewise, some humans are going to be surprised and afraid of what magical people can do… But that's mostly because they've never been exposed to magic before and fear of the benign unknown is pretty easily removed most of the time simply by, you know, learning more about the thing you're afraid of. Which of course can't happen under legally mandated segregation.

So the "what if" game I want to play today is this: what if there was no more Decree for the Use of Magic in the presence of Muggles and the Ministry of Magic just let people be free to do what they want?

Trading Magic Medicine for Ballpoint Pens

Given that it's a fictional universe, it's a little hard to say, but if we replace "magic" with "advanced technology" and think about the results of international trade and immigration, we might just get an answer.

From that standpoint, the most obvious benefit would be that everyone would be immensely better off.

As the economist Art Carden has said, trade is made of win.

Even when two people or groups of people trading with each other are seriously mismatched in skills and technology – like wizards and Muggles, or developed and developing nations, or even lowly video producers and the much smarter people who create his cameras, computers, and microphones – both can benefit from each other.

The United States produces an immense amount of technology and innovates new products and services constantly, yet we still import about $240 billion worth of goods and services every month, often from places much poorer and with much lower access to the kinds of machinery or capital we have here.

Witches and wizards have us lame Muggles beat. But we could give them the internet and pens, and that would improve their lives too.We get cheaper stuff, but they also get wealthier as the stuff they're making gets sold in larger international markets.

In economic terms, even though people in the US often have the "absolute advantage" in producing goods and services, tons of people outside the US have a "comparative advantage" in producing those same things – that is, even though we can make almost anything more efficiently than people in most other parts of the world, it's still often the case that differences in opportunity costs mean that it's a better use of resources for Americans to focus on stuff like designing computers or researching cancer treatments and import a lot of other things made by people in other countries.

The point is, when we allow trade, both the buyer and seller – and society as a whole – gets richer, even if people's skills or access to capital aren't equal.

So think about how that applies to Harry Potter. Clearly, witches and wizards have us lame Muggles beat. Magic makes everything easier, from building new houses, to transportation, to fixing broken bones and healing the sick. Even assuming magic can't solve every problem, bringing magic into the Muggle world would be like introducing modern machinery to cavemen.

The benefits for us Muggles would be unimaginable, but non-magical innovations would improve the lives of magic-users too.

Muggles produce a number of products that don't seem to exist in the magical world… Imagine how many robes are ruined by India Ink spills and how much easier life would be for young witches and wizards if they just had access to ballpoint pens!

Magic-users would also enjoy the benefits of sharing knowledge through the internet, Wikipedia, Facebook, YouTube, and generally get to enjoy the existence of iPads and Kindles instead of carrying around sacks full of heavy books everywhere they go for no reason.

The opportunities for mutual benefit are endless and there's a lot of empirical research to back this up.

Economics Meet Magic

Economists often conduct an activity with students called "the trading game." In this game, individuals each get a mystery bag filled with stuff – candy, school supplies, toys, whatever – and they're asked to rate their satisfaction with the contents of the bag. Then groups of students get to trade with each other. As the game progresses, the trading groups grow until eventually anybody is allowed to swap whatever they want with anybody else in the room willing to make a deal.

At the end of the game, the players rate how much they like what's in their bag again.

What happens is that people rate their satisfaction more highly as they gain more potential trading partners.

It doesn't matter what participants start with or if there's an imbalance from one person to another. It turns out that the more people there are to trade with, the easier it is for everyone to get more of whatever it is that they value and less of what they don't.

Even more importantly, desegregation means that in addition to exchanging stuff people can also exchange ideas. And that's what sparks creativity and innovation.

Magic-users might have more skills, but they don't have a monopoly on great ideas, and Muggles are likely to think of ways to use magic that have never even occurred to people who grew up with it everywhere.

Magic-users might have more skills, but Muggles are likely to think of ways to use magic that had never been thought of before.One of the greatest benefits from trade and immigration is the way different people's ideas mix with each other and turn into brand new, better ideas.

In his book The Rational Optimist, evolutionary biologist and anthropologist Matt Ridley argues that trade, and specifically the exchange of ideas that comes with it, is the main way that human society has progressed throughout history.

The flourishing of technological improvements from stone, to bronze, to steel, superior hunting and farming tools, better housing materials, even the development of money itself is all concentrated around ancient trade routes.

Just imagine what could happen if somebody like Neville Longbottom mixed his knowledge of magical herbology with modern Muggle farming techniques. Our food supply would never be the same.

But there's something even greater than material wealth or technological progress at stake here.

People often forget that trade requires trust, and trust is best achieved by getting to know the people you're trading with. And getting to know each other is the best way for people of all races, nationalities, religions, and interests to become friends and learn to respect and care for one another as individuals. If Muggles and wizards were desegregated, they would start learning more about each other's cultures, and form relationships that could never exist otherwise.

People who come together just seeking economic benefits often discover friendships and even love along the way. Wizards and Muggles getting to know each other and being allowed to trade with each other would create a safer, kinder, and more peaceful world.

And isn't that really what Harry Potter was fighting for all along?

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