Thoughts on economics and liberty

Preliminary sketch of a booklet on economics for children aged 9-12 – for comment

A few days ago, I came to the conclusion that just like everyone needs basic literacy, basic arithmetic and basic science, so also everyone needs basic economics. Without an intuition regarding how the economy works, most people will grow up into economic illiterates. Some of them, who enter the field of politics, can cause great harm with their ignorance.

I couldn’t readily find an existing booklet for little children, so I’ve prepared my own.

Please review the sketch (below) and send your thoughts and comments at sabhlok@gmail.com.

Download below:

Economics for Children

Once a reasonable document can be created, one could request someone who writes children’s books to translate it into children-friendly language.

==FURTHER NOTES==

It is actually **impossible** for the untrained person to try to distinguish causes of prosperity of nations. All their “guesses” are guaranteed to be wrong.

No wonder the average punter is extremely confused about virtually everything to do with society-level matters.

Even trained “economists” often fail to distinguish underlying causes because they do not study in sufficient depth. Their typical blind spot is governance systems, about which they don’t have any clue nor any interest.

Given this almost impossible task, it is necessary to focus on economics education and hope that one day a new set of citizens will emerge who are better able to see the invisible.

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This book is meant for children from across the entire world – every country, every culture. In all societies about 30 to 40% of our effort goes directly into the pocket of the government. What governments do with this is a matter of importance. Governments also interact with the people in a number of ways. Unless children are aware the role of government and how taxes are collected and spent, they will fail to exercise good judgement as adults.

Economics is essential to educate people about the effective role of government. Unfortunately, knowledge about this discipline is very limited among the general public. This enables bad politicians to hijack people’s labour, taxpayer money, into infructuous projects. Children who have been educated in economics will ask questions as voters or as political leaders. The more understanding a society has about economics the more prosperous it will become, because such society will allow the maximum production of wealth to take place and minimise the harm caused by unnecessary government interventions.

The basic principles of economics are not hard to understand but they do require early education. At its core economics is the understanding of how the world can run happily on its own without much direction by society. Economics challenges the assumption that we need government to do everything for us.

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Just as every child must have knowledge about physical hygiene, they need knowledge about economics which allows them to see through self-interested harmful claims made by bad politicians.

===MATERIAL EXTRACTED OUT FROM THE BOOK==

This preliminary/background commentary has no place in the book. I’m posting it here for any potential future use.

 

1.1         The need

Sometime in the middle of September, 2015, I came to a view that everyone needs to understand the economic way of thinking, just like they need basic literacy, basic arithmetic and basic science.

Without a basic understanding and intuition about how an economy works and how wealth is (or can be) created, most people will apply their untrained intuition and will go wrong. Just like without understanding that there are bacteria, people made entirely wrong decisions about diseases caused by bacterial infection, so also in the case of economics, people make entirely wrong decisions about the operation of the economy

Economic illiterates often gain power over other people through the field of politics. In their ignorance and arrogance, they cause untold harm to the people whose welfare they wish (or allegedly wish) to support, and to the world.

The economic way of thinking can be called the economic method. It is a branch of the scientific method. It is, however, more complex in many ways than the method used to understand the physical sciences, since there is no linear relationship in economics. Everything in economics is a relationship between one or more different forces. It is all about interactions, about further actions and reactions, about consequences that ricochet across the entire world economy. Everyone’s economic actions affect everyone else. Always, without exception. The outcomes of these actions can be predicted – as accurately as the outcomes of physical actions, although as the impacts of these actions get into second and third order effects, the outcomes become increasingly harder to predict correctly.

Good intentions fail to translate into good results precisely because of this complexity. The “do-gooders” are not aware of how the first order effect they seek to create will come at the expense of widespread second and third order effects which will overwhelm their good intentions.

I couldn’t readily find an existing booklet for little children to teach them the economic way of thinking. , so it became necessary to prepare something new.

This is a preliminary sketch. I would like as many people as possible to get involved, and would like to have them listed as contributors to this work.

Please review the sketch (below) and send your thoughts and comments at sabhlok@gmail.com.

1.1.1      Why economics is so confounding difficult

ECONOMICS IS SO DIFFICULT BECAUSE IT IS ALMOST ENTIRELY ABOUT THE COMBINED EFFECT OF THINGS THAT ARE HIDDEN FROM SIGHT; INVISIBLE.

Since 99.99 per cent of economics is about things that are hidden from sight (the endless series of actions and interactions) it is literally impossible except for a highly trained person to understand what’s going on.

Economics is a discussion regarding these invisibles. Not for nothing did Adam Smith call the price system and the market an invisible hand.

In religion, too, people have failed to grasp the invisibility of God, so every religion has been forced to create visible artefacts/ temples/ mosques. [Btw, you well know this doesn’t mean I have a position on the existence of any type of god, visible or invisible; economic systems are absolutely real, their mechanics of operation entirely invisible.]

The question is how can one explain this to the ordinary person (including highly competent physicists) who are not used to looking at a vast series of actions/ interactions. In the physics lab scientists looks at a particular event, and then it is over. What happens further, and then further, etc. is converted into general laws of entropy.

In economics, however, any action (even the most modest) has a direct effect on the **entire** world economy. Its effects ricochet across the whole world, and not just in one generation: in multiple generations (like the effects of Indian socialism in driving out its best talent from India).

It is truly hard to get people to think about these hidden effects. The fact that amazingly brilliant people like Adam Smith, Bastiat and Hayek have been explaining this for hundreds of years but there is almost zero awareness of these hidden mechanisms and effects of economics action even today, suggests that that challenge to get the ordinary, untrained person to understand the economy is Herculean, close to impossible.

Yes, this little book project would be a tiny drop in the ocean, but we need a widespread concerted effort to simplify the key elements of economics so every child can begin to see through the confounding fog of the price system, and stop railing against the only system that has taken mankind from a short, brutish life of misery, to health, wealth and abundance.

1.1.2      Need recognised as long ago as in 1910

The desperate need for teaching economics to children was recognised as long ago as in 1910 in one of the premier academic journals in economics. However, nothing (or almost nothing) has been done for the past 105 years.

“we have a correspondingly large number of self-assertive citizens, who, whether they know anything of economics or not, will take a practical hand in legislating on the subject” [John B. Clark, Economics for Children, Journal of Political Economy, Vol. 18, No. 6 (Jun., 1910), pp. 432-434]

There is a simple truth in it which a boy ten years old can master; and I know this because I have seen one of them do it. As he sits by a dining-table a child of ten is able to see that he wants a first slice of bread more than he wants a second one, and still more than he wants a third. It is not necessary to call this fact a “law of diminishing utility of successive increments of consumers’ goods,” although after a time the boy would get the meaning of that formula. The simple possibility of gradually satiating wants, by supplying more and more of the thing wanted, is all that it is at first necessary to see.

The child can be made to perceive that if in the butler’s pantry there were a given amount of bread, which must be disposed of that day or go altogether to waste, and if the waitress were a bread-merchant who owned this supply, there would be a limit to the price she could ask and still dispose of the whole quantity. No one would want the last remnant of this commodity enough to pay very much for it, and this fact, for the time being, would suffice to make bread cheap. If, moreover, the supply every day were likely to be what it is on this particular day, the bread would remain cheap.

This is one of the score of principles which, when stated technically and in abstract terms, appear to most people strange and complex, though in simple terms they appear nearly self-evident. It is entirely possible to strip of technicalities a very large number of economic principles and make them simpler than the problems of mathematics with which a child of ten years is expected to grapple.

To secure this result it is, in my judgment, best to impart the knowledge first in a conversational way and with an abundance of questioning, which will enlist the pupil’s interest and set his reasoning powers at work. After such a preparation a very simple textbook is useful. This plan exacts from the teacher something which may not always be supplied, but it would be strange if in any large school it were not possible to find some teacher capable of supplying it. The extent in the United States to which economics is now taught is all in favor of the plan.

John B. Clark Columbia University

1.2         The approach taken by this book

We need to get the economic method or way of thinking understood by children. Everyone doesn’t need to know or understand the technical terms used in the economics profession.

In fact, ‘textbook’ economics often limits itself to the toolkits of economics without providing an understanding of the economic way of thinking. Such knowledge can lead to much harm.

There are a number of university trained economists who have never understood the economic method or the economic way of thinking. It may be too late to change them, but there is a need to educate the future generations.

1.2.1      Plan

I propose two books, one for ages 9-12 and the other (in due course, advanced) for ages 12-18. The children’s book will avoid jargon and any unnecessary concept/s. Concepts that are not critical will be excluded (e.g. opportunity cost, sunk costs, most market and government failures).

1.2.2      Advance warning

Please note that there is an overarching theme to this book. The whole of human progress to date can be summarised as a revolt against government and religion. That is the most start truth about human history. There are deep vested interests among government/ religion to block reason and production. These are highlighted, along with details of how ordinary people are able to produce enormous amounts of wealth, without the assistance of any government or religion.

To the extent you blindly support government or religion, please don’t give this book to your children. They are likely to get “infected” with questioning. But without such basic questioning it is impossible to understand the economy.

1.3         Broadly similar works

There do exist some (broadly) similar works. Most of these are targeted at teenagers or young adults. These include:

A little bit more advanced (teenagers):

Connor has written these three books for children: http://tuttletwins.com/

 

 

=====KEYWORDS=====

These are meant to attract searches from people on google who are looking for a book on economics for their children. Please ignore this section!

Basic economics for children

How nations become rich

Why does everyone not get the same money?

Primary school economics

High school economics

Primer of economics

Sanjeev Sabhlok

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