An Asset That's a Liability

There Was Economy Before There Was Economics

One of the things that make the free market (in Bastiat’s felicitous phrase) the “prodigiously ingenious mechanism” it is also makes it vulnerable to destruction: people don’t have to understand how it works. As long as they are free to pursue their own purposes in an environment where life and property are safe, the market will work. Participants do not need knowledge of, much less academic degrees in, economics. Economics is primarily a descriptive, or positive, science: economists study the consequences of what people do; people don’t carry out the instructions of economists. To put it another way, there was economy before there was economics.

It is good that the market works that way. If people had to understand the market process for it to work, there would be no market process. How would the first market have gotten started?

But it’s also unfortunate. Since people can accomplish their economic goals and even get rich without knowing economics, they have little incentive to understand the subject. (Much university economics does little to increase the incentive.) Such ignorance makes them susceptible to glittery notions that would scuttle the marketplace. Someone who has never contemplated the ingenious paradox of unplanned order is liable to think that all order is consciously arranged. That person won’t bridle at schemes to “improve” on the market because to him the matter will be a choice between two plans, rather than between planning and no planning.

This suggests that it is good for people to encounter the idea of unplanned order early in life. The idea is accessible to children as young as ten years old, if not younger. I spent 15 weeks this winter and spring teaching basic economics to homeschoolers, ages 11 to 16. Beginning with the elements of human action and going all the way to the Microsoft case, those kids were able to follow the subject, and what’s more, they enjoyed it. One of my most gratifying moments came midway in the course while I was discussing some aspect of the market. A girl in the front row riffled through her copious notes, raised her hand, and said, “It’s an unplanned order.”

I sleep a little better knowing that 20 kids who had not heard of Ludwig von Mises seven months ago now know who he is.

* * *

Economist Paul Heyne died in April. Thomas DiLorenzo pays eloquent tribute to this incomparable teacher and mentor.

The government wants Americans to stop smoking. But as Steven Yates explains, people–and the reasons for their habits—vary widely, making the blunt instrument of the state particularly bad at addressing the great tobacco issue.

The federal government has been paying to put more police on the street. Most people take as a given that more police are better. Really? James Payne dissents.

Advocates of market-based money are naturally interested when someone introduces an alternative, commodity-backed currency into the marketplace. Will it be viable in a world of fiat money? Will it be accepted? Lawrence White investigates.

The United Nations Conference of Trade and Development laments the increasing poverty of the least developed countries in this era of globalization. Tomas Larsson says hold the tears—UNCTAD is wrong.

In January Israel Kirzner criticized the supply-and-demand analysis of mainstream economists on grounds that they assume perfect knowledge for all market participants. This month James Ahiakpor says this is an unfair charge and Kirzner defends his position.

The issue of sweatshops has returned. Social activists call on government to crack down on employers who maintain low pay and poor working conditions for unskilled workers in the United States. Wendy McElroy points out that the real culprit is rarely mentioned: the U.S. Immigration and Naturalization Service.

People who fail to appreciate the market process often abhor some of its most valuable features. Case in point: corporate takeovers. How can something so important be so misunderstood? Norman Barry comes to the defense of the embattled corporate raider.

We’ve heard much about the poor record of the “whole language” approach to reading instruction. What is often overlooked is that this is not just a bad method of teaching children to read; it’s also a program of political and social indoctrination. Patrick Groff lays out the agenda.

One hundred years ago this month, the late Gottfried Haberler, student of Ludwig von Mises, opponent of inflation, and champion of free trade, was born. Richard Ebeling describes his long and illustrious career.

Here’s what our columnists have come up with this month: Donald Boudreaux shows how markets instill civility. Lawrence Reed seeks shelter from “great ideas.” Doug Bandow looks at the latest survey of economic growth and economic freedom. Thomas Szasz sizes up the medical status of attention deficit/hyperactive disorder. Dwight Lee calms fears over the depletion of agricultural land. Mark Skousen proposes an alternative to “left and right.” Walter Williams examines some silly ideas. And David Schmidtz, hearing claims that economic mobility is an illusion, replies, “It Just Ain’t So!”

The reviews evaluate books on cosmic justice, history, federalism, economists, children, and taxes.

—Sheldon Richman

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