A few years ago, frustrated with the low quality of economic discussion in our nation, I decided that I needed to do something about it. As I did not have the power to cajole the whole country into listening to me, I asked my wife Susan to gather the kids into our library, and I pulled out the old rolling blackboard I keep off in the corner and said, “Guys, this is how the economy works when it works the way it’s supposed to….” And I started drawing things on the board.
My daughter Grace put our video recorder on a tri-pod, pointed it at me, and turned it on. Over the course of a couple of days and five or six sessions, we covered everything from productivity, growth, and inflation to demographics, integration of the economy with capital markets and even international economics. They’re smart kids and they got it, each at their own level. Christopher, age 25 got more than Jack, age 9, but they all got the basic picture. If I couldn’t get the world to pay attention to the economic model which has lifted half of humanity out of the misery of universal poverty and squalor, at least I could get my little corner of the world to do so.
But then, on a whim I sent the videos to my friend and colleague in the financial service industry. This friend and I had been struggling with ways to communicate the basic principles of sound economics and financial theory in ways which would be accessible on a wide scale. A few days after I sent him the videos he called me and told me that not only did he greatly enjoy them, but that he wanted to use the material as the centerpiece of an effort to educate the firm and its clients about the basics of reasoning from a principle-centered point of view about economics and investing.
I was flattered, but I pointed out to him that I was wearing an old stained tee-shirt in the video and that I’m pretty sure I had burped a couple of times, and that I wasn’t sure that was the sort of thing he’d want to send to his clients. He agreed and told me he that he would rent a TV studio for a couple of days and fly me down to do it right.
I did just that. And other than the fact that I wore a button shirt and a blazer over my old ratty tee shirt, and that I took some belch-suppressing antacid before taping, and there were lights and cameras, the setting was pretty much the same: me, chalk and chalkboard. We did six videos, straight through, without any takes as I recall, and with a break for lunch. Later on the video crew added some cool special effects.
I’ve done three private screenings of some of these videos before releasing them publicly here. In general, the response has been far stronger than I expected. I’d be too embarrassed to quote the overly kind comments that people have been making. I think the response has a lot more to do with the drought of clear economic and financial thinking in the modern world than it does with the actual quality of my presentation.
The videos cover six topics:
· What goes wrong
. Human alienation leading to state worship and state worship leading to a cascading cycle of market manipulations, distortions, crises and further manipulation is the phenomenon driving modern economic problems.
· Why our current leadership class can’t fix it
. The system which attempts to use central planning in order to control the future and to salve human anxiety can never fix itself. This system ignores the other aspects of life—for example, the growth and creativity of the human family—as the true drivers of the economy. The fragmented modern worldview which dissects the world into separate spiritual, cultural, demographic, managerial, economic and financial categories can’t fix the economy because the world is an integrated whole, not a disintegrated chaos.
· How to fix economics
. The fundamental and unavoidable importance of principles is at the heart of this video segment. Principle-less geniuses like Keynes cannot solve the problem because their minds are no better than the presuppositions on which they build their theories. After the rule of central planning geniuses fails, we are told that the worlds of economics and finance are simply random and not subject to any discernible patterns of cause and effect. But you can’t build a science on the belief that nothing can be known, and people intuitively sense that the world must make sense. Principle-centered reasoning is the alternative to intellectualism and unknowable randomness.
· How to survive until the economy gets fixed
. Very few people who are currently in positions of influence or power in the United States have a good principled understanding of economics and finance and how they relate. But you have to make business and investment decisions in a world rocked by waves of monetary, fiscal and regulatory distortion. How do you do that?
· Why and how things will get better
. The design of the international system of nation states is to create national competition for talent and capital. This system punishes financial folly, rewarding wise nations, and impoverishing foolish ones. It takes time, but this system of national testing puts the arc of human history pointing towards freedom.
Some viewers may find references to God in the videos troubling. I’m not sure why. I’m not offended when someone doesn’t mention God, so I don’t know why someone should be offended when I do. But God is a key concept in classical economics, as Milton Friedman’s mentor, Jacob Viner, demonstrated in his book Providence and the Social Order
. I’ve written about this before in this column
for anybody who is unaware of the importance of theism to the development of classical economic theory.
Some sophisticates may find these presentations to be too simple. If I had done them 5 or ten years ago, they would have been as complicated as everything else in the world of economics. I’m thankful that I waited, and left time during which the God who created all this, could clear away the extraneous ego-gratifying complexity of the world of experts, and that I was able to have a glimpse of some of the patterns of human action in all their elegant, beautiful simplicity.
The videos were done for a specific financial services firm, but they present universal principles usable by any other firm or individual investor. Watch, enjoy, let me know what you think and if you can think of individuals who could benefit from the material inside, feel free to forward the videos to them.
Mr. Bowyer is the author of "The Free Market Capitalists Survival Guide," published by HarperCollins, and a columnist for Forbes.com. This article orginally appeared at Forbes.com