Economics is actually the youngest of the social sciences, but unfortunately it is also the most painfully misunderstood. The Scottish historian Thomas Carlyle decreed that Economics was the dismal science and today this title is still quite applicable amongst economists and average citizens alike. The general reaction I get upon starting a conversation on the topic of economics is similar to the picture of the two owls you see here. I have actually seen pain or dread in the faces of those Ive brought up the subject with. When I ask someone what they know about economics, the general response they give is that it has something to do with money or investing – which is kind of like saying that the ocean has something to do with boats. This frequent answer bothers me. Yes, economics does have a lot to do with both money and investing but that is merely one faucet of the science of economics. Investing, in and of itself, is actually another subject altogether and shouldn’t necessarily be what you think of when you think about economics. People are often surprised when I tell them that economics is about everything they do.
I am going to assume that most of my readers have little to no economic education. Even so, anyone who went to a school that actually took the subject seriously enough to teach it has already forgotten anything they learned. As a school subject, economics is not even regarded within the same category of importance as the subject of geography (which is kind of frightening considering the increasing frequency at which Americans, including the 44th President[1] have trouble remembering how many States there are within our own Union). I believe our poor geographic knowledge is an excellent depiction of where most of us stand on the subject of economics.
What little we do know about economics can be easily categorized under the label of “Excruciatingly Boring”, and it’s because of this label that we are constantly, if not explicitly, motivated to ignore (or detest) the subject altogether. We are taught to steer clear from economics, to continue with our own interests and passions while we let some other sap waste their life overseeing the workings of our economy. Why bother with economics, when we have better things to do like, vlogging, using Shake Weights, counting blades of grass or watching mindless young adults from New Jersey try to make sense of the world? How can economics compete against this kind of situation? I’ve come to the impression that people compare the studying economics to the studying of juggling: Both are rare and complex talents – but not subjects that any of us take seriously.
It is the other subjects of formal education that we often hear a greater push for: Music, the arts, classical literature, medicine, and technology - but we never hear about the push for learning economics. We never hear someone claim that it is the most important basic subject they could learn, equal to learning how to read or add. While the aforementioned subjects are indeed useful subjects, they do not, in and of themselves necessarily help produce more goods and services nor create prosperity but rather - they are the products of prosperity. Shouldn’t we at least be somewhat educated in the subject that can affect or encompass nearly all other subjects?
All right, so maybe economics is important, and maybe you do want to learn more about it but where should you begin, and how can you dredge through such a study without eventually wanting to throw yourself into oncoming traffic? Obviously, my first goal in this opening is to convince you that economics is, in fact, not boring. Now, I do understand that because phrases like “Inflation Induced Inter-temporal Monetary Disequilibrium” exist, you probably don’t believe me, but in my opinion, economics is only boring much in the same way that oxygen is boring. We simply don’t pay any attention to it unless we suddenly aren’t getting any.
Now, I certainly can’t blame you for steering clear from the subject of economics. How could I blame you when most of the teachers and leaders in the economic community remind us of that teacher from Charlie Brown. However, economist Ludwig Von Mises aptly wrote that; “The flowering of human society depends on two factors; the intellectual power of outstanding men to conceive sound, social and economic theories and the ability of these or other men to make these ideologies palatable to the majority.” Sound economic theory is vitally important for creating prosperity, but what is perhaps more important is the need for people who can simply explain it without causing the rest of us to drop dead from a brain aneurism (see Alan Greenspan and his infamous Greenspeak).
Most of our economic confusions are the result of treating economics as if it were any other subject, but economics is not like physics or biology, where everyone generally agrees on the practices, principles and applications. Within economics there is vast division on both principle and practice, with each varying school of thought claiming sole possession of the one true ideology. Because of this, as stated by economist Henry Hazlitt, economics is haunted by more fallacies than any other study known to man. So, just like the once commonly held belief that the Earth was the center of the universe, today there are many fallacies in economic thinking that most of us accept as common sense. These fallacies have existed since the dawn of economics and have historically slowed human progress to a dismal pace, often requiring centuries for sound practice to come into fruition. So, how can you wade through all this mess and still make it through the other side with your head on straight?
I can bet that from the moment you began reading this, you have been repeatedly mulling over the thought that you’ve made it this far in life without the need to know economics, so why would you need to know it now? Firstly, the truth is that you have actually been an active practitioner in economics your whole life and, (don’t freak out) even reading this book is an act of economics. Because you and I are constantly making decisions based on incentives, disincentives, preferences and tastes, economics is an ongoing and ever present process. Secondly, many of you who read this are now coming into an age where you are paying far more attention to your futures (where you will work, and how you will maintain a certain lifestyle) and economics is slowly becoming something you are recognizing the need to understand. It may be true that you can live a healthy and productive life without the strict knowledge of such subjects as cardio-vascular surgery or auto mechanics, but I argue that you cannot survive at any socio-economic level of any society completely bereft of sound economic understanding – because your life and wellbeing actively depend on it.
Anyone alive and sober in the latter half of this decade should clearly understand that they could no longer ignore economics. This goes beyond those who simply are ignorant of the subject but those who blindly follow a partisan economic policy simply because they are too lazy to investigate the economics they supposedly support. America is no longer the invincible power that many of us thought it was, and as our economy remains stagnant to this very day, most of us still have no clear answer as to why we are unable to get ourselves out of it.
So often in the event of an economic downturn answers that rarely look beyond what economist Thomas Sowell refers to as “Stage One” are the most plentiful. We don’t really know what caused the economy to crash, so instead we just supplement the answer that we are in this mess “because [insert people group] are greedy.” But this has no depth as an answer. It is like remarking that a plane has crashed into a hillside because of gravity. The answer may be fundamentally true, but it is completely devoid of a full economic explanation - It also does nothing to prevent another plane crash from occurring!
Since I began this work on the subject of poverty and the creation of prosperity I want be sure that I carefully define the two terms early on. By poverty I mean third-world destitution, not what Americans commonly think of when they think of poverty. Americans have taken their economic prosperity for granted to such a degree that we have almost no idea what true poverty actually is. Many of the poorest Americans still have a TV, a phone, running water, a microwave-oven, and a car. We live such wealthy lives that we assume it is the norm, the standard that should exist everywhere else on Earth. Comically, we hold candle light vigils and awareness rallies to spread the shocking knowledge that poverty actually exists somewhere in our world and then demand that something be done about it. It’s good that we want to end poverty but we fail to grasp that poverty has been the norm for the majority of the human race since the dawn of time - and with good reason – poverty is the direct result of bad economic structures.
Americans have it backwards; a relatively short time ago, it was fully understood by the World that their lives would be comprised of hard labor and grinding poverty, which was swiftly followed by early death. No retirement, no pension, no vacations to tropical locals and no instant micro-waved gratification; none of the luxuries we enjoy today. Back then, the children of most families had to work, not because greedy businessmen were looking to shove kids down coalmines, but because if the children didn’t work then their family would very likely starve! Even the Kings of old still had to urinate in a bucket and throw it out a window but no king has ever lived like the average Blue-collar American lives today.
The real question we should ask ourselves is how did we do to bring ourselves to such wealth in such a relatively short amount of time? Nations like China have been around far longer than we have, what did we do in 250 years that the Chinese couldn’t do in 2500 years? Our lives of intercontinental travel, instant worldwide communication, retirement, advanced medicine, technology, and all manner of entertainments that make you go blind - are the result of employing sound economics. Americans have more than we could ever imagine because we’ve adopted economic structures that enabled prosperous the growth from encouraging and rewarding creativity, hard work, productivity and ingenuity. To profess ignorance in economics while yet complain about economic issues such as high gas prices, unemployment, CEO salaries, over-population, energy scarcity, food scarcity, or poverty in general robs our complaints of any credibility. This is akin to complaining about the score of the Football game when you have no idea how Football is even played. You understand that one team was victorious, and the other was not, but as to how this all occurred – well that doesn’t seem very important to us.
As economist Robert P. Murphy observed, “The sad truth is that most Americans do not know economics. We have no ability to grasp and analyze the problems within our own nation because we are not educated in it. Only with sound economic thinking will you be able to make heads or tails of how the world works.”
Economics my have been called dismal, but this is not because it is boring or complicated. Economics has become dismal because so many young men and women today have strong opinions on economic subjects (which they subsequently cast votes for) and yet they possess little to no economic knowledge on those opinions whatsoever. They support recycling, wage laws, wealth redistribution or even population management without any economic understanding to back their support for those beliefs. They fail to ask whether or not these economic actions actually achieve the desired (economic) effects. Economics is dismal because we ignore it every day.
The bottom line is that economics isn’t as difficult as you’ve been led to believe. so stop shying away from it. With the help of some of the greatest economic writers in history, I hope that you come to understand that economic systems based on fallacies and foolish notions can only bring about stagnation, poverty and economic collapse. Conversely, it is sound economics that brings about vast prosperity for the majority of the world. And even though that prosperity will not be perfect, it is certainly a far reach above where we (and other nations) find ourselves today. It’s time to do away with what has been proven to destroy wealth, enslave nations and cause more deaths than any other force on the planet. It is time you learned some economics.
[1] At a campaign event in Beaverton, Oregon, Barack Obama claimed to have visited 57 states, which only makes sense if he was including American occupied territory.
