In the very first class on the Principles of Economics we teach our students how beneficial trade is. We explain that voluntary exchange (trade) increases overall welfare and is mutually beneficial. Economists tend to regard this basic “principle of economics” as an axiom, providing the basis for many other principles of economics and, most importantly, the notion (or fallacy) that “the markets know best”… Perhaps paradoxically, despite the many beneficial features of trade, merchants (i.e. professional traders), rarely enjoy social esteem. One reason fo...

In the early 1980’s, Soviet engineers drove a prospection tunnel into Sakdrissi hillock close to the small town of Kazreti, about 50 kilometers south of Tbilisi. Much to their surprise, they discovered that the hillock already bore a labyrinth of tunnels, and, as quickly became clear, these tunnels were manmade. An old gold mine had been discovered. 25 years later, a Georgian-German team of archaeologists excavated the site and reopened the ancient entrance to the mining complex. Inside the tunnels and around the entrance they found plenty of artefacts o...

When I first started reading to my daughter I decided to buy a collection of Georgian fairy tales. However, as I started to read, I noticed that there were lots of things I did not agree with and found myself having to rephrase some of the passages as I read. I noticed that the poor are always portrayed as good characters and, no matter how they get rich (stealing from, deceiving or killing a “vicious rich giant”), social justice is assumed to have been met. I have always wondered what Natsarkekia, a lazy “ash digger”, who even after appropriating the gi...

In 1122, King David IV. reconquered Tbilisi from the Muslims. In those times, a bloodbath among the former oppressors would have been the logical consequence of such a victory. Leaders of the High Middle Ages took merciless revenge against their enemies once they had defeated them. Yet David did not! To the contrary, he did not only let the former rulers live, but David was even anxious that the Muslim population might leave Tbilisi after the fall of the city. In order to send a strong signal of appreciation and friendship to the Muslim population, he ex...

[“Dodge or Die” is a series of reports on the relationship between the pedestrian and the motorist in Georgia by Robert Linkous]. As Stephen Dowling put it in his BBC News article a few years ago, “when it comes to crossing the road, there's no such thing as an international standard. Every country does it differently.” How people drive and cross the road, according to Dowling, is a matter of a country’s cultural values. Is it really? Bad traffic habits are a grave problem in many cities around the world. Yet, while many have managed to largely solve the...

Recently, we discussed the low ranking of Georgia when it comes to social capital (“Since When Do Georgians Trust Banks More Than Friends?”). In the 2012 Legatum Prosperity Index our country ranked #140 in the social capital subindex, out of 142 surveyed countries! This seems unbelievable and even shocking, but if we explore the topic a little bit deeper, we may find reasons for such a low ranking. The World Bank definition of social capital is the following: “Social capital refers to the institutions, relationships, and norms that shape the quality and ...