Economics is the “science” of explaining human actions, or how humans act to satisfy their wants given limited resources. Most people have little or no economic education. A famous economics professor said that for years, he had to spend most of his time refuting economic fallacies, but nowadays, he has teach his student the fallacies so that he can refute them. To begin your economics education, I recommend that you start with my “Economics Primer” essays, followed by reading Leonard Read’s Essay I, Pencil and Frederic Bastiat’s The Law.
If you read these three things, you will have more economics knowledge and education than 90% of America (well, some big number anyway). All three essays are quite short, available online, and all three could be read in two or three hours…if you’re a slow reader. Once you have completed this foundation, you should read Murray Rothbard’s book, “What Has Government Done To Our Money?”. It’s a little bit longer (about 100 small pages with large print) but when you have finished it, your economic education is adequate.
Alternatively, after reading the economics primer, you could skip straight to Crash Proof 2.0, which is a little more applicable to your immediate finances.
by Pat Heyman
This is a very brief introduction to economic principles written by yours truly.
by Leonard E. Read
This short essay describes the various kinds of specialized knowledge that goes in to making a pencil. No one in the world has the necessary knowledge to make a pencil, yet through collaboration, pencils can be had anywhere in the world, for less than the cost of a stamp. The essay poetically builds to its final economic lesson: that things even more wondrous than pencils are possible when people are left free to make their own choices and cooperate as they will. No one person orchestrates the pencils complete construction, but everyone involved benefits from the final product…even if they don’t use pencils.
by Frederic Bastiat
The Law is one of the founding essays of modern economics. Bastiat describes the essential ingredients for a productive society and economy. Most of The Law concerns itself with the effect of government and politics on economics. He also outlines one of the most pervasive economic fallacies, what has come to be known as the “broken window fallacy.” Imagine that a vandal has broken the window of a bakery. A crowd gathers round and at first decries the crime because it will mean that the baker must now spend some of his money to repair the window. But then some genius realizes that the glass shop will be better off, and the repairmen will then have more money, and he’ll spend it on shoes or something, and so on and so on, until the vandal is now seen as a hero.
The economic activity that was seen (the glass repair) is what people notice and think about. All of the things the baker might have done with money instead (e.g., buy his son braces, hire a second employee, buy a new oven) are not seen, and so are ignored. The truth is that wealth was destroyed by the vandal. It seems a simple lesson, yet the broken window fallacy is alive and well even today. This article chronicles various government officials and economists invoking the fallacy after 9-11 and Hurricane Katrina.
by Murray Rothbard
Rothbard chronicles the history of money and describes how money develops. Inevitably, governments eventually lay exclusive rights to issuing money and begin a cycle of inflation (artificially creating new money, or in plain terms&mdashcounterfeiting). Inflation is an insidious two-headed evil; one head is a hidden tax, stealing the savings of those who were diligent and self controlled, who saved their money; the other head causes the business cycle of booms and busts leading to calls for more government intervention, leading to the loss of freedom and independence of the people. As the saying goes, forewarned is forearmed.