How does economic freedom effect your country? How does it effect you? How does the US compare to the world on this scale and what does it benefit us? Economics, specifically capitalism, is often pained monster ripping through society stealing from others so select few who control the monster can prosper. As in anything, some people definitely take advantage where they can, but in general the power of economic freedom is a net benefits to societies.

Here are some resources to support this notion.

How does economic freedom effect your state?

http://mercatus.org/freedom-50-states-2011

A must read (or listen) for us all.

I am not a professional economist but I find the subject fascinating. It is not because I have a love of math or numbers that I find it fascinating, in fact I am in large measure quite disinterested in numbers, math, and formulas. Does this seem like problem? To many it probably does because they associate economics with the technical side rather than the human side.

I was an English major and although I ultimately finished my schooling in computer science, I love words, concepts, and ideas. I suppose this is why I love to talk about politics and religion – two landscapes rich in ideas and concepts. As I continue to learn in life, I have found that the area of economics is overflowing with interesting and valuable ideas – even when one largely ignores the mathematical skyscrapers and sewers that many of us find daunting.

As I have studied, economics has revealed itself as a way to understand humans and how they interact with one another in a society. How they improve their lives through that interaction and as a secondary results improve their societies – or as the case may be – destroy them. Economics is a human area of study because without us there would only be botany and zoology. I have heard it said that the most important thing on this planet is humans and the most important aspect of humans is the relationships they build with one another.

Economics to a large degree strives to understand those relationships, the reason for their inception, and their outcomes. It is looking at why we act in different ways under different circumstances. Why do some people buy cars and other ride bikes, why do some create a business, why do people stop looking for employment, why do some charities fail when others do not, why do some societies escape poverty and some do not, why do some people trade with each other at every opportunity and others do not, what happens when a nation provides goods or services instead of a private business providing those things, and how does each of these forces impact our lives and the lives of our children and the world in which they grow?

Economics is not necessarily tied to money either. We often think it is because that is what our society often uses when transacting with one another. But is that the only way we interact? Hardly. We trade things, we borrow things, we interact with one another when physical things are not exchanged at all – only ideas. All of these things interactions can be described as economic transactions. We participate because we receive something of value that we believe to be equal or greater than what we lost.

When two women sit and talk and the first one shares a recipe for bread and the other shares a system for organizing a busy schedule, has not an economic transaction taken place. Items of value were exchanged and value created making both women more productive in the world. Sure, it might not be tracked by the government and show up as part of the Gross Domestic Product (GDP) but value was still exchanged and wealth created in the process.

If we take just a moment to think about one economic concept, Prices. We could spend days talking about the almost magical power by this influences our lives and informs our ability to choose our destiny. If I may quote: “We have a tendency to view prices as deception, a trick played on consumers to scam us into paying more than we like.  Prices are information.  Like ants tracing pheromones, prices provide signals for the billions of buyers and sellers that we call “the market.”  These prices guide our savings, our production and our consumption.  Isn’t it marvelous how we can use a price to evaluate all 3 of those functions?  Prices are like a universal language!”

I urge you to not stop there. There is much to appreciate about Prices, Incentives, Scarcity, Specialization, and Trade just to name a few. And none of it need require a calculator. In all my studying to date about economics – and it has been my favorite subject for the past five years or so – I have yet to pull out my calculator to understand something and yet my understanding of the world has grown many times over. I encourage you to explore this area of knowledge as well.

“The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design.”

- Friedrich Hayek

If nothing more is accomplished by the study of economics than the ability to override hubris when assessing the world around us then something valuable has certainly been achieved.

I found this quote from awhile back and wanted to share it. This is a principle the government today is going against.

“You cannot legislate the poor into prosperity by legislating the wealthy out of prosperity. What one person receives without working for, another person must work for without receiving. The government cannot give to anybody anything that the government does not first take from somebody else. When half of the people get the idea that they do not have to work because the other half is going to take care of them, and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for, that my dear friend, is the beginning of the end of any nation. You cannot multiply wealth by dividing it.” ~ Dr. Adrian Rogers, 1996 - Ten Secrets of a Successful Family

Some people take this as meaning corporate executives should be able to get large salaries and a “golden parachute” for running their companies into the ground. That is not what this is saying and a very different topic. As we say a lot on this site, understanding the topic is key and we need to be careful to not cloud the discussion with non-sequiter. While they are both validate topics and need to be addressed they are not the same thing and cannot be solved with the same policies.

“The personal right to acquire property, which is a natural right, gives to property, when acquired, a right to protection, as a social right.”

James Madison

People acquire property (rather that is actual property or money) through their labor. Now some of us may think people get paid more then their labor warrants. This may be true at times. The person however gained that property through his labor and the legal contract for the reward, and because of this the reward cannot be taken from him. If the balance between labor and reward are not justified then the people need to change the contract not withhold the reward because they don’t like the outcome of the contract. When this process is circumvented  the legality of a contract is at risk as well as people’s obligation to understand the nature of the contract.

Many people, myself included, have been looking back at the Financial Crisis of 2008 and asking the question, "What the hell happened?" The information landscape of finance is a difficult one made even more difficult by political agendas. Having interest in both financial markets and politics I have been reading and listening to many sources to try and understand the event. Even though I spent three years at Fidelity Investments as a brokerage trader, had my series 6, 63, 7, and 4 licenses to trade securities, and being a political junkie for the last 15 years, I would not call myself an expert in either arena. What I do well is listen to very smart people and evaluate their arguments and their evidence calmly and rationally to come to a conclusion about an issue.

Due to the complexity of this particular issue I have chosen to share with you all the sources I have used to inform myself and my opinions rather than create a summary or specific conclusion. I think it is extremely important for us as citizens to understand to the best of our ability the events that shape, and shock, the world in which we live so that we may have the most accurate understanding of the forces at work. Even if we are unable to derive 100% concrete conclusions.

To begin, I would suggest you start with the following podcast:

Russ Roberts on the Crisis – Russell Roberts is Professor of Economics and the J. Fish and Lillian F. Smith Distinguished Scholar at the Mercatus Center at George Mason University. Roberts has a clear style of speaking that provides a great place to start. He doesn’t lose his audience with technical jargon and even shares the possible concerns as to why his theories could be incorrect (a sign of someone that is after the truth). If you prefer to read instead of listen, this podcast is based on his paper Gambling with Other People’s Money, feel free to start there instead.

After you have listened to Roberts, you may desire more as I did. Here are other sources to get more insight, analysis, opinions, and perspectives on this issue:

SHOWS:

PBS FRONTLINE: The Warning

PBS FRONTLINE: Inside the Meltdown

PBS FRONTLINE: Breaking the Bank

PODCASTS:

EconTalk and John Taylor

EconTalk and Charles Calomiris

EconTalk and and many other thought leaders discussing the crisis

BOOKS:

Bailout Nation: How Greed and Easy Money Corrupted Wall Street and Shook the World Economy

A Failure of Capitalism: The Crisis of '08 and the Descent into Depression

Too Big to Fail: The Inside Story of How Wall Street and Washington Fought to Save the Financial System---and Themselves

House of Cards: A Tale of Hubris and Wretched Excess on Wall Street

The Big Short: Inside the Doomsday Machine