Economics 101 starts here. This is the first of four episodes with economist Lawrence Reed that build the subject from the ground up, an economics course in four weeks, so that the argument about the national debt, inflation and affordability can be had by people who actually know how an economy works. Reed opens with a definition: economics is the study of human action in a world of limited resources and unlimited wants. From there he walks Adam Smith and The Wealth of Nations in 1776, and the mercantilist myth Smith destroyed, that the world's wealth is a fixed pie to be fought over rather than something you can bake more of. Jenny Beth Martin takes that straight to the present. The national debt has passed 40 trillion dollars and is now larger than everything America produces in a year. Washington is spending two trillion dollars more this year than it takes in, and roughly a trillion of the seven trillion dollar federal budget goes to nothing but interest on the debt. The hour covers the invisible hand against the iron fist, the lockdowns as a live experiment in central planning, why value is subjective, Leonard Read's 1958 essay I, Pencil, what happened when the Soviet Union abolished prices, competition against monopoly, the proper role of government, free trade and tariffs, and the Austrian School. Lawrence W. Reed is president emeritus of the Foundation for Economic Education. He led the organization for twelve years, ran think tanks in Michigan and Idaho, taught economics at the university level for seven years, and is the author of nine books. Learn more at teapartypatriots.org and jennybethshow.com.
Jenny Beth Martin is co-founder of the Tea Party movement and Chairman of Tea Party Patriots Action. She hosts The Jenny Beth Show, which airs Monday through Friday at 1:00 PM ET.
Lawrence W. Reed is president emeritus of the Foundation for Economic Education, where he is still full time after twelve years as its president. He was previously president of think tanks in Michigan and Idaho, taught economics at the university level for seven years, and is the author of nine books, most recently Born of Ideas. He has been involved in economics and economics teaching since his twenties. This is the first of four episodes in the show's economics series with him.
Key topics:
What economics actually is: the study of human action in a world of limited resources and unlimited wants
Adam Smith, The Wealth of Nations in 1776, and why he wrote about the wealth of nations rather than the poverty of nations
Mercantilism and the myth that the world's wealth is fixed and can only be divided up
A national debt past 40 trillion dollars that is now bigger than everything America produces in a year
Two trillion dollars more spent this year than taken in, and a trillion of the seven trillion dollar budget going to interest alone
Productive debt against current consumption, and the balanced budget amendment nobody in Washington has thought to propose
Gross domestic product explained in plain language
The invisible hand of the marketplace against the iron fist of government
The lockdowns as the clearest test of central planning most Americans have lived through
Why all action is individual, and what happens when people argue from collective abstractions
Trade-offs, subjective value, the mud pie and the apple pie, and why the labor theory of value fails
Diminishing marginal utility, or why the sixth ice cream cone is worth less than the first
Leonard Read's 1958 essay I, Pencil, and the claim that nobody on earth can make a pencil alone
How prices carry information, and what happened when the Soviet Union abolished them
Whale oil to crude oil, with no federal department directing the switch
The dollar worth less than a nickel of what it was when the Federal Reserve began in 1913
Competition as the striving for excellence in the service of others for self benefit
Monopoly as a government grant of exclusive privilege, and businesses that go to Washington to block competitors
The proper role of government: night watchman, referee, courts and defense
Free trade, the law of association, the division of labor, and opportunity cost
Protectionism, the current tariffs, and why Reed says the jury is still out
Frederic Bastiat's candlemakers petitioning the king to block out the sun
Microeconomics and macroeconomics, and why you need both
The Austrian School: Carl Menger, Ludwig von Mises, and F. A. Hayek's 1974 Nobel Prize
Timestamps:
00:00 — Cold open: forty trillion in debt, and an economics course in four weeks
00:44 — Lawrence Reed joins, and the four-part plan
02:26 — Three think tanks and seven years teaching economics
03:13 — A definition: human action, limited resources, unlimited wants
06:41 — Adam Smith, 1776, and the first comprehensive economics book
09:22 — Mercantilism and the myth that wealth is fixed
10:53 — Forty trillion in debt, and bigger than what America produces
15:53 — Productive debt, and a balanced budget amendment nobody has proposed
18:18 — Gross domestic product, explained
21:01 — The invisible hand of the market against the iron fist of the king
23:17 — The lockdowns as a live experiment in central planning
29:11 — All action is individual, and society never ate breakfast
34:03 — Government grocery stores in New York
36:31 — Trade-offs, subjective value, and the mud pie
39:45 — Diminishing marginal utility, or the sixth ice cream cone
40:04 — I, Pencil: nobody on earth can make one alone
43:12 — Prices carry information, and the Soviets threw it away
46:14 — Supply, demand, and the most remarkable force in your life
47:56 — High prices are their own cure
50:27 — The dollar is worth less than a nickel was in 1913
52:46 — Medicaid, work requirements, and Nick Shirley on fraud
55:50 — It is not only the politicians
58:37 — Competition is the striving for excellence
01:02:57 — The proper role of government: night watchman and referee
01:05:19 — Free trade, the division of labor, and opportunity cost
01:10:12 — Protectionism, tariffs, and a jury still out
01:16:55 — Bastiat's candlemakers petition the king to block out the sun
01:18:30 — Microeconomics and macroeconomics
01:20:35 — The Austrian School: Menger, Mises and Hayek
01:25:01 — What comes next in the series
Links: jennybethshow.com, teapartypatriots.org, fee.org