In this issue
April 9, 2014

Jonathan Tobin: Why Did Kerry Lie About Israeli Blame?

Samuel G. Freedman: A resolution 70 years later for a father's unsettling legacy of ashes from Dachau

Jessica Ivins: A resolution 70 years later for a father's unsettling legacy of ashes from Dachau

Kim Giles: Asking for help is not weakness

Kathy Kristof and Barbara Hoch Marcus: 7 Great Growth Israeli Stocks

Matthew Mientka: How Beans, Peas, And Chickpeas Cleanse Bad Cholesterol and Lowers Risk of Heart Disease

Sabrina Bachai: 5 At-Home Treatments For Headaches

The Kosher Gourmet by Daniel Neman Have yourself a matzo ball: The secrets bubby never told you and recipes she could have never imagined

April 8, 2014

Lori Nawyn: At Your Wit's End and Back: Finding Peace

Susan B. Garland and Rachel L. Sheedy: Strategies Married Couples Can Use to Boost Benefits

David Muhlbaum: Smart Tax Deductions Non-Itemizers Can Claim

Jill Weisenberger, M.S., R.D.N., C.D.E : Before You Lose Your Mental Edge

Dana Dovey: Coffee Drinkers Rejoice! Your Cup Of Joe Can Prevent Death From Liver Disease

Chris Weller: Electric 'Thinking Cap' Puts Your Brain Power Into High Gear

The Kosher Gourmet by Marlene Parrish A gift of hazelnuts keeps giving --- for a variety of nutty recipes: Entree, side, soup, dessert

April 4, 2014

Rabbi David Gutterman: The Word for Nothing Means Everything

Charles Krauthammer: Kerry's folly, Chapter 3

Amy Peterson: A life of love: How to build lasting relationships with your children

John Ericson: Older Women: Save Your Heart, Prevent Stroke Don't Drink Diet

John Ericson: Why 50 million Americans will still have spring allergies after taking meds

Cameron Huddleston: Best and Worst Buys of April 2014

Stacy Rapacon: Great Mutual Funds for Young Investors

Sarah Boesveld: Teacher keeps promise to mail thousands of former students letters written by their past selves

The Kosher Gourmet by Sharon Thompson Anyone can make a salad, you say. But can they make a great salad? (SECRETS, TESTED TECHNIQUES + 4 RECIPES, INCLUDING DRESSINGS)

April 2, 2014

Paul Greenberg: Death and joy in the spring

Dan Barry: Should South Carolina Jews be forced to maintain this chimney built by Germans serving the Nazis?

Mayra Bitsko: Save me! An alien took over my child's personality

Frank Clayton: Get happy: 20 scientifically proven happiness activities

Susan Scutti: It's Genetic! Obesity and the 'Carb Breakdown' Gene

Lecia Bushak: Why Hand Sanitizer May Actually Harm Your Health

Stacy Rapacon: Great Funds You Can Own for $500 or Less

Cameron Huddleston: 7 Ways to Save on Home Decor

The Kosher Gourmet by Steve Petusevsky Exploring ingredients as edible-stuffed containers (TWO RECIPES + TIPS & TECHINQUES)

Jewish World Review Nov. 8, 2006 / 17 Mar-Cheshvan, 5767

Common sense economics

By Walter Williams

Printer Friendly Version
Email this article

http://www.JewishWorldReview.com | Professors James Gwartney (Florida State University), Richard Stroup (Montana State University) and Dwight Lee (Georgia University), three longtime colleagues of mine, have recently published "Common Sense Economics." It's a small book, less than 200 pages, that addresses a serious economist dereliction of duty: making our subject understandable to the ordinary person.

Public misunderstanding of basic economic principles leaves us easy prey to political quacks, charlatans and assorted hustlers. Part I of "Common Sense" focuses on 10 key elements of economics that I'll only briefly describe.

The first is incentives matter. During the 1970s, gasoline prices rose dramatically. Immediately, people did more carpooling and eliminated unimportant trips. Gradually, they shifted to more fuel-efficient cars. During the 1980s and 1990s, gasoline prices fell. Again, people altered their behavior by buying more SUVs and more powerful cars.

Incentives matter under socialism, too. In the former USSR, managers and employees were compensated by the number of tons of glass they produced. Factories produced glass so thick one could hardly see through it. The rules were changed so that compensation was made according to square meters of glass produced. Factories produced glass so thin that it broke easily.

The second element is there's nothing that's free. Politicians talk about "free education," "free medicine" or "free housing," but that's nonsense. Resources are required to produce each of them. Of course, some people received these goods at a zero price, but that doesn't mean they didn't cost someone, usually a taxpayer, something.

Their third element is we don't make all-or-nothing decisions such as choosing between eating or wearing clothes, that is, dining in the nude so we can afford food. Instead, we choose between having a little more food at the cost of a little less clothing.

Their fourth element is that trade promotes economic progress through encouraging specialization. That's true whether the trade is between individuals, regions or countries. Specialization and trade make us dependent upon one another, but not to worry. The world's poorest people are far more independent than we. Check out Darfur. You might see families building their own shelter, gathering their own food and heating supplies, and making their own clothing. The flip side of the idea that trade promotes progress, and their fifth element, is the idea that obstacles to trade stymie progress. Among these political obstacles are taxes, licenses, regulations, price controls, tariffs and quotas.

Elements six and seven are related. Profits direct resources to their highest value uses. Losses free misused resources for higher value uses. People earn income by serving their fellow man. This link between serving others and income gives us incentive to develop talents and skills and become highly valued.

Elements eight and nine address the other keys to progress: Investment, better ways of doing things, sound economic institutions, and Adam Smith's idea that market prices direct buyers and sellers toward activities that promote the general welfare.

Their tenth element is crucial. We shouldn't ignore the secondary and long-term effects of an action. For example, trade restrictions on foreign sugar that result in higher prices for domestically produced sugar save jobs in our sugar industry. Because of those higher prices, major candy manufacturers such as Wrigley and Brach's moved to Canada and Mexico to take advantage of lower sugar prices. That resulted in more U.S. jobs lost than were saved by the sugar trade restrictions.

"Common Sense," subtitled "What Everyone Should Know About Wealth and Prosperity," contains a wealth of information about the major sources of economic progress, economic progress and the role of government, and important elements of practical personal finance. The latter contains finance principles on how to invest your money, using the principles of compound interest and how to get more out of your money. There's nothing in the book that goes beyond common sense, something rare these days.

Every weekday JewishWorldReview.com publishes what many in in the media and Washington consider "must-reading". Sign up for the daily JWR update. It's free. Just click here.

Walter Williams Archives

© 2006, Creators Syndicate.