Dr. David Friedman posted a link to his most recent work on his blog. The selection is titled “Legal Systems Very Different from Ours” and it is a really fascinating read.
The Athenians had a straightforward solution to the problem of producing public goods such as the maintainance of a warship or the organizing of a public festival. If you were one of the richest Athenians, every two years you were obligated to produce a public good; the relevant magistrate would tell you which one….
Such an obligation was called a liturgy. There were two ways to get out of it. One was to show that you were already doing another liturgy this year or had done one last year. The other was to prove that there was another Athenian, richer than you, who had not done one last year and was not doing one this year.
This raises an obvious puzzle. How, in a world without accountants, income tax, public records of what people owned and what it was worth, do I prove that you are richer than I am? The answer is not an accountant’s answer but an economist’s—feel free to spend a few minutes trying to figure it out before you turn the page.
The solution was simple. I offer to exchange everything I own for everything you own. If you refuse, you have admitted that you are richer than I am, and so you get to do the liturgy that was to be imposed on me.
It kept me engaged all afternoon.
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