"I have a sense that there's some breakdown of communications here, and I hypothesize that maybe it's a missing concept of consumer surplus as distinct from usual market prices being what defines gains from trade.  As we would put it, the consumer value to you of shoes isn't the amount you'd usually pay for shoes like that in a market, it's the amount you'd pay not to be forever forbidden from wearing shoes ever again, if there was some powerful anti-shoe magic otherwise about to afflict you, and you had to pay a fourth-circle wizard to counterspell it before it took effect.  In dath ilan, we'd usually expect the consumer value of an item to be noticeably higher than the selling price.  The distance between consumer value and selling price is the consumer surplus, the amount of the gains from trade that goes to the consumer."

"The market price of shoes should settle somewhere not too far from the costs of making leather and going to cobbler lessons, not settle at nearly the absolute maximum price that anybody around would pay to be allowed to ever wear shoes again.  So people are noticeably better off because of shoemakers existing at all, rather than being only a tiny bit better off because the selling price of shoes is so astronomical that it cancels out almost but not quite all of the real benefit that people get from shoes."

"Or, that's how we'd expect it to be in dath ilan."

".... if there were some powerful anti-shoe magic about to take effect you'd still only have enough food to maybe make it to spring if you're lucky, and nowhere near enough to pay a fourth-circle wizard for anything," says Tonia. She's not sure this is a productive argument but she's pretty sure it's not a revealing one.

"I want to ask about a generous fourth-circle wizard who offers to cast the anti-anti-shoe-spell for just one gold piece, but I'm guessing you'll say that towns settle into an equilibrium where nobody has a gold piece to spend on anything, because, if they did, one more of their kids would have lived and that kid would now be eating more food.  This, unfortunately, makes it harder for me to define the concept of consumer surplus around a counterfactual willingness to pay any more."

"So suppose instead I tell you that consumer surplus is the amount that people would be sad if shoes stopped existing.  They would, on the one hand, be happy never to pay for shoes again, but, on the other hand, they would be even sadder than that, because the shoes were worth more to them than what they paid.  We in dath ilan would expect people to be a noticeable amount of sad, rather than just shrugging because they were only barely in favor of paying for shoes in the first place at standard shoe prices."

"- all right. I think people'd be - a noticeable amount of sad, if the cobbler died. They'd say he was a lousy man and they don't miss him but they'd be worse off and not just barely."

"...and then that town never has a cobbler again, and the surrounding farms who came there to buy shoes, just never get shoes again?  I mean, is that what happens in real life when a cobbler dies?"

Keltham is CONFUSED by the part about them saying the cobbler was a lousy man.  He notices the confusion consciously, then sets it aside.

"I mean, usually he'd train his son, but I was imagining if he didn't train his son so people figured who knows if we'd ever get shoes again or just have to make our current ones last forever."

"So there's, like, lineages of cobblers, each of which trains a single other cobbler to replace themselves, and if a cobbler dies out prematurely, all of Cheliax has one less cobbler lineage in it - where did cobblers come from originally?  Wait, are shoemakers a particular kind of nonhuman?"  Keltham is increasingly confused but that makes it all the more important to follow wherever this is going.

"No? He can take some other apprentice if he wants but since it's good work he'd probably rather train up one of his sons, and there's certainly not enough money for two cobblers, so he only trains one. In the city probably cobblers take more apprentices."

"And the town that lost its cobbler doesn't just invite in a new cobbler from the city, now that there's an unserved market there, because...?"

"...why would anyone want to move to a village in the middle of nowhere?"

"Why was the original cobbler in a village in the middle of nowhere?"

DOES GOLARION IN FACT HAVE MARKET EQUILIBRIA.

"...he was born there?"

"If cobblers live better lives in cities, he could move from his village to the city.  If cobblers don't live better lives in cities, why wouldn't one be willing to move to the village?"

"...people don't like moving?"

"Okay, Golarion has some kind of problem I don't even know how to describe right now.  I check my current guess that we are not talking about just shoemakers, here, this is also shirtmakers and basically everything else.  Affirm?"

"Spinning and weaving and tailoring everyone does at home," Tonia corrects him. "But...yes, affirm that it's much more general than shoemakers."

"...What's spinning and how would you do weaving or tailoring at home at your current technology level?"

"To make fabric," says Tonia, "you shear a sheep. Then you clean the wool and card it and then you use a spinning wheel to turn it into thread, and then you put the thread on a loom, and then you stitch it to make clothes."

"These people are supposedly very poor.  Where did they get all of this individual machinery for their personal house instead of having one machine time-shared among the whole village."

"...it's not much machinery. And you want to be spinning all the time, pretty much, whenever you aren't planting, you wouldn't make nearly enough thread if you were sharing it around the whole village."

"Where are they getting the power for this machinery?  The town is on a river and all the houses are along the river and they all have waterwheels that capture the motion from the water to turn the - spinning wheel?"

"....you turn it with a pedal."

"I think that we should, perhaps, get back to the fundamentals of economics as applied to negotiation, so that I can sell Cheliax the general and specific arts of making more efficient machinery."

Next up is going to be the Final Trade Offer Game, which shall henceforth be referred to as Ultimatum Game for brevity.  One person picks a split from 0:12 to 12:0, the other person has to assent to it or both get nothing.

What do the Chelaxians make of this, one wonders?