The Charcoal Burner And The Fuller

There was once a charcoal burner who lived and worked by himself. A fuller,* however, happened to come and settle in the same neighborhood; and the charcoal burner, having made his acquaintance and finding he was an agreeable sort of fellow, asked him if he would come and share his house. "We shall get to know one another better that way," he said, "and besides, our household expenses will be diminished." The fuller thanked him, but replied, "I couldn't think of it, sir. Why everything I take such pains to whiten would be blackened in no time by your charcoal."

*A fuller bleached and thickened woolen cloth through a boiling and pounding process.

Ashliman, D. Aesop's Fables. New York City: Barnes & Noble Classics, 2005. 

Perhaps one of the most important things Adam Smith taught us is that individuals acting in their own interest will make the overall economy better. This principle is the fundamental of study of economics.

But is it true? Not always. In the fable, if the burner and the fuller decided to share the same household, it is true that their "household expenses will be diminished." However, the fuller can no longer produce white woolen cloths. Suppose the fuller is the only fuller in town, that means no woolen cloths for the whole town. So even if the fuller doesn't mind the charcoal burner blackening his cloths, the township will probably not allow the charcoal burner and the fuller to live together.

Individuals acting in their own interests don't always make the overall economy better off, in fact, they could worsen the economy sometimes.