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I Have No Clue What I’m Talking About, But Neither Do You

Pre-digested opinions about political matters appear to be the norm, and the persistence of mistaken perceptions (the belief that something is true though all evidence points to the contrary) afflicts many more people than just the late-night hangers-on at Flag Brew. These pernicious human tendencies prove problematic for democratic society whenever important decisions have to be made. But, leading up to an election… well, wouldn’t it be nice if we could put our dearly held (including erroneous) ideas aside long enough to get our facts straight?

We ought to start a new tradition in the United States. In addition to New Year’s resolutions in January, we should also commit to summertime resolutions every four years when the presidential campaigns are under way. If you’re not sure what your resolution should be, here’s my advice. Become better acquainted with those important economic ideas – capitalism, production, efficiency, socialism, and utilitarianism – that affect our everyday lives even if we don’t have a clue what they really mean. We use the term “capitalism,” for example, to denote a broad variety of things, although the gulf between the “free-market” and “state” varieties is wide.

“The last hundred years have seen dramatic experiments in economic policy,” writes Lawrence H. White in The Clash of Economic Ideas. The adoption of central banking, an international monetary system, the emergence of free-market principles, regulation, deregulation, and re-regulation around the globe are just a few of the important economic policies that have made a difference in our lives. White’s historical approach covers the cast of essential characters: Hayek, Mises, Marx, Friedman, and Keynes, as well as many of the pivotal economic debates that continue to shape American politics today.

Think about the many burning questions that have been posed during this presidential campaign. Should the government intervene in markets or maintain a hands-off, laissez faire approach? Should the one percent be forced to pay higher taxes for the benefit of the 99 percent? Is Obamacare a thinly veiled ploy for more government control or no such thing? If there’s a recession, what about all the new construction going on around town? More importantly, why can’t I have that raise?

Lawrence H. White doesn’t answer those questions directly. But, knowing more about the ideas behind the economic issues and controversies confronting us today is illuminating (so that’s how growth in the money stock affects inflation!) and potentially transforming as well when you realize that it is unlikely Glenn Beck or Arianna Huffington have a good handle on these underlying theories.

Are the economic policies of Democrats and Republicans really very different, you might ask? White doesn’t answer that question either, but he does relate an old joke about the contrast between two competing ideologies. “Under capitalism man exploits man,” the joke states, but, “under communism things will be exactly the reverse.”
The Clash of Economic Ideas is not all fun and games. White’s book covers a lot of tough ground. From his first chapter on the turn away from laissez-faire, to others covering the Great Depression, the rebirth of Smithian economics, the quantity theory of money, and the growth of government in public goods and public choice, it’s not an easy road to travel. But remember that resolution. These things really matter. Take a break from Maddow and Limbaugh and confront some of these important ideas on your own. Better yet, make White’s book the next choice for your monthly reading group. If we are going to clash over economic ideas, let’s make sure we understand what those ideas are in the first place.

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