Once upon a time a mouse, a bird, and a sausage formed a partnership. They kept house together, and for a long time they lived in peace and prosperity, acquiring many possessions. The bird's task was to fly into the forest every day to fetch wood. The mouse carried water, made the fire, and set the table. The sausage did the cooking.
The folk and fairy tales collected by the brothers Grimm are not widely considered to be significant demonstrations of the economic way of thinking. After all, aside from the static (and mostly symbolic) wealth of kings and queens, money in these tales tends to show up in comic or magical contexts—like an enchanted girl who drops gold from her mouth when she speaks, a purse that always contains one gold coin no matter how often you spend it, the goose who lays golden eggs, or the Italian tale about a donkey who provides gold from … elsewhere. Even these magically provided types of money do not function like money. No one ever spends the goose’s golden eggs or the money dropped from the enchanted girl’s mouth. The magic purse and the donkey are in the story, in most versions of the tales, in order to be stolen and to allow a villain to take the place of the hero or heroine until everything ends happily ever after.
When we remember that the economic way of thinking is not only about monetary exchange, but about all kinds of exchange and choices, these tales look a bit different. “The Mouse, the Bird, and the Sausage” is a perfect example.
The three companions begin this brief tale in an equitable and beautifully functioning partnership. Each member of the trio has a job, executes it well, and benefits from his own work and the work of his compatriots. Everything is going perfectly, and they live, as the Grimms tell us, “in peace and prosperity.”
That is, until the bird starts to squawk.
Discontented with his lot, and describing his voluntary exchange of labor as (depending on one’s translation) “servitude” or “slavery,” the bird insists that the current arrangement is unfair and that they must all switch jobs. He assigns new tasks, and the sausage is sent to gather wood, the mouse to do the cooking, and the bird to tend the water, fire, and house.
In other words, the bird attempts to construct “fairness” from the top down by ignoring the advantages that have revealed themselves over time as the trio has settled into their familiar tasks and evolved a functioning and prosperous example of social cooperation under the division of labor. He forces the trio to desert the idea of comparative advantage as laid out by David Ricardo’s On the Principles of Political Economy and Taxation (1817) and in chapter 8 of Mises’s Human Action. Comparative advantage is the idea that everyone has something they do at lowest opportunity cost to themselves. That is the thing they should do if they wish to benefit themselves and others the most through exchange.
The sausage is probably the clearest example of comparative advantage in the tale. The bird and the mouse may well be able to exchange their tasks (though I suspect the bird’s sharp eyesight, flight capability, and experience in gathering twigs for nests make him the best wood gatherer of the three), but the sausage cooks every night for a very specific reason. “When mealtime approached, she would slither through the porridge or the vegetables, and thus everything was greased and salted and ready to eat.” Seasoning dinner with one’s own flesh is a very low opportunity cost for a sausage (even a sentient one), but very high opportunity cost for a bird or a mouse—especially given that they can keep house or gather wood better than a sausage, no matter how sentient.
The tragic consequences of denying the truths of comparative advantage rapidly become clear in the tale. The sausage, sent off to gather wood, is eaten by a dog. The mouse attempts to season the boiling pot of vegetables with her body, but is instantly scalded to death. And the bird, angry and panicked, begins to throw the wood around the house. It falls into the hearth, and the house catches fire. When the bird runs to draw water from the well to quench the flames, the bucket falls into the well. He falls in with it, and he drowns.
Adam Smith reminds us that “the greatest improvement in the productive power of labour, the greater part of the skill, dexterity, and judgment with which it is any where directed, or applied, seem to have been the effects of the division of labour.” But Ricardo and Mises remind us further that labor cannot just be divided up any old way. When we do that—when we ignore the concept of comparative advantage and the way it allows each of us to contribute most effectively—we end up like the bird, the mouse, and the sausage. And they did not live happily ever after.