Dr. Roy Spencer has a new book out, and I’m happy to give him space on WUWT with a plug for it. Josh of cartoonsbyjosh.com did the cover art. Looks like Roy was funded by “big fire” in writing this book 😉 Anthony
FUNDANOMICS: The Free Market, Simplified
July 4th, 2011by Dr. Roy Spencer
I’m pretty excited that today (Independence Day, 2011) is the release date for my new book, Fundanomics: The Free Market, Simplified.
Our friend, Josh, did the cover art and it perfectly captures one of the book’s main messages: the greatest prosperity for ALL in a society is achieved when people are free to benefit from their good ideas.
In Chapter 1, A Tale of Two Neanderthals, Borgg and Glogg are the tribe’s firestarters, who get the idea to invent firesticks (matches). This leads to a system of trading with a neighboring tribe which has many great hunters, and as a result the inventors’ tribe never goes hungry again.
But the favored treatment the inventors receive from the tribe’s elders later leads to resentment in the tribe, and people forget how much better off they all are than before — even the poorest among them. Technology and prosperity might change, but human nature does not.
Simply put, a successful economy is just people being allowed to provide as much stuff as possible for each other that is needed and wanted. Economics-wise, everything else is details. When we allow politicians and opportunistic economists to fool us into supporting a variety of technical and murky government “fixes” for the economy, we lose sight of the fundamental motivating force which must be preserved for prosperity to exist: Liberty and the pursuit of happiness.
The main role of the government in the economy is help ensure people play fair…and then get out of the way.
I devote each chapter to a common economic myth.
For example, it’s not about money, which has no inherent value and is simply a convenient means of exchange of goods and services that is more efficient than bartering.
It’s not even about “jobs”, because it makes all the difference what is done in those jobs. Many poor countries have a much lower standard of living than ours, yet fuller employment. If we want full employment, just have half the population dig holes in the ground and the other half can fill them up again. The goal is a higher standard of living…not just “jobs”.
And the desire of some for a “more level playing field” and for “spreading the wealth around” is simply pandering to selfishness and laziness. The truth is that most of the wealth has already been spread around, in the form of a higher standard of living. If we do not allow the few talented and risk-taking people among us have at least the hope of personally benefiting in proportion to their good ideas, then economic progress stops.
The good news is that those few talented people need help, which is where most of the rest of us come in. One person with a new idea for a computer cannot design, manufacture, market, distribute, and sell millions of computers to the rest of society. They need our help, and in the process everyone benefits.
I also examine the role of various government economic programs, most of which end up hurting more than helping. A major reason why the government is so prone to failure is the lack of disincentives against failure in government service. In the real marketplace failures are not rewarded, which helps keep us on the right track to prosperity.
Even the truly needy in our country would be better off if we allowed private charitable organizations, rather than inefficient government bureaucracies to compete for the public’s donations.
I’ve been interested in basic economics for the last 25 years, but frustrated by the technical details (marginal costs, money supply, etc.) that too often scare people away from understanding the most basic forces which propel societies to ever high standards of living. Now, with our country facing tough decisions about our financial future, I decided it was time to stop yelling at the idiots on TV (and giving away all my ideas to talk show hosts) and put the material in a short — less than 100 pages — book that would be approachable by anyone.
I’ll be signing the first 500 copies. The price is $12.95 (including free shipping in the U.S.) You can see all of the chapter first pages at Fundanomics.org. I think this book would be especially valuable to homeschoolers.
Dr. Spencer:
As a self-published book, have you considered an electronic book? Publication costs are much lower and both Barnes and Noble and Amazon let you easily sell self-published ebooks.
My sister self-published a hard-cover book and has never recovered the publication and distribution costs.
@johnny Gunn
July 5, 2011 at 8:35 am
“[…]
PS – Isn’t this a weather blog?”,
================================
Read the very first line under the Blog name.
I am a homeschooler and this book will be on my must purchase list for the start of school this fall.
I do not know where Dr. Spencer now calls home, probably Huntville, but I am going to claim him as a “Hometown boy makes good.” for us folks in the UP of Michigan. Go Soo Blue Devils.
Dr. Spencer:
Reminds me of the Russian joke: “So long as the bosses pretend to pay us, we will pretend to work.”
Maybe your work will be like the book Freakonomics which was very successful and a great read.
Mark Wilson says:
July 5, 2011 at 10:26 am
Maybe I should have put “sarcasm on” and “sarcasm off” on the haircuts and manicure.
I would be interested to see links that show that offshoring industry created more jobs in the US.
Also links on manufacturing. I have the impression that the US is only manufacturing arms related products, which matches the continuous wars. Even there thought, much electronics is outsourced, from what I have read.
Also links on the health of the middle class in the recent years. You think that the recession is a sign of affluence?
Mark Wilson says:
July 5, 2011 at 10:26 am
Maybe I should have put “sarcasm on” and “sarcasm off” on the haircuts and manicure.
I would be interested to see links that show that offshoring industry created more jobs in the US.
Also links on manufacturing. I have the impression that the US is only manufacturing arms related products, which matches the continuous wars. Even there though, much electronics is outsourced, from what I have read.
Also links on the health of the middle class in the recent years. You think that the recession is a sign of affluence?
Grizzled Bear says:
In it’s basic form, capitalism is just people trading goods / services / expertise / currency etc to others for their goods / services etc.
Leave out the currency part, and you have described just about any society. WIth that part, it could be socialist, communist, capitalist, whatever. All societies trade. Capitalism stands for a social system with a particular way of producing goods and making them available for trade, as well as for a particular relationship between the state and civil society.
Things have moved on a bit since the18th century days of sole proprietorships. And as Polyani argued in The Great Transformation, those days of liberal/capitalist dominance were large engineered by the state. A ‘free’ market didn’t just spring up from enthusiastic individuals.
History may be bunk as the great anti-intellectual bigot Henry Ford called it, but it’s worth knowing a little of it anyway.
Self publishing it about as far from peer review as you can get.
I think the cover art nails it. No such thing as a free market since neolithic times.
Sounds attractive, If the book is good, including that Roy Spencer’s values are sound, I’ll publicize it to 19,000 friends (many who have blogs).
(I have to add the qualification about values as I do not know much of the author and do find some skeptics have particular ideologies that undermine their views of economics.)
Certainly is a need for step-through efforts, I’ve done that on monopolies including rebutting the “level playing field” line, in http://www.keithsketchley.com/monopol3.htm.
I’ve heard of one or two other books that try to give a simple explanation either by example or step-through, one title is “The Incredible Bread Machine” by Susan Love Brown but I have not got my hands on a copy yet.
You realize of course that you can do both. You can have a steady job that pays for the family, and work towards creative endeavors that can bring you extra money on the side. In the rare case you may achieve wealth if the fruits of your creativity become very popular. I’m not sure why it seems necessary to tell people they should put blinders on, lock-in on some long-term job stability and constant saving to achieve a proper retirement. That is quite narrow-minded and likely foolish advice. This is particularly ironic on such a site as this that is frequented by Willis E and his well-practiced motto, “Retire Early, Retire Often.”
Mike, self-publishing is not ‘as far from peer review as you can get’. Showing up at WUWT to troll about talking up models of polar seas melting the ice and pretending that scientists raising the alarm about human-caused ‘global warming’ are being ‘demonized’ is the epitome of remoteness from peer review. Oh…those were your contributions. Sorry.
You show up here to chip in, then everyone, anyone, even children, counter your silly or baseless comments. I am not sure who is in your peer group is, but consider this ‘reviewing your work’. (Read any papers lately? I recall that I and others recommended that you do some actual reading to learn a bit about the subjects before commenting.)
But seriously! I mean, ‘warm water…’?! Read the ARGO papers; read the satellite papers; at least read the thermometer. Do not read the models. They are always hot. That is why we call them ‘models’. They promote what their creators think should be fashionable. Watch some Fashion TV. Learn. What most models promote, no matter how hot, is nearly always wrong, wrong, wrong.
uh oh – here comes a competitor with something bigger, cheaper, funnier more convenient and way more sophisticated:
http://reocities.com/Athens/Aegean/1835/kandide.html
written by a pirate so no copyrot, all rites reversed. all expenses were paid by virtue of the amount of life generously given to its creation. the cost to you is what nature hath requir’d- the amount of your life given to reading it. basic economics.
patent and copyright monopolies have stifled innovation and criminalized competition.
feel free by violating them. visit your local library. 🙂
@Tom in florida:
to rely on somebody else to provide the place to work, the tools and materials, all means and goals plus instructions – that is not manly, independent, or liberated.
if you have chosen utter dependence, you will take what is given and like it. if you want different, be a natural man and make your own gig.
jobs are for children; steps on the way to adulthood.
having a boss is not far removed from staying at home and obeying daddy.
it’s always somebody else in charge of your life, isn’t it? do you see a pattern?
and why you may never have a good master? because the owner (was you) has defaulted, abandoned responsibility, and strives to be serf to a wiser, more benevolent master, not himself.
While I respect Spencer I think this book is high on idealism and low on reality.
History shows time and time again that when income disparity between the upper and lower quintile exceeds 1000% a popular revolt is imminent. In the United States in 1947 it was 400%. It’s about 600% today. No one, rich or poor, is well served by excessive concentration of wealth. In saner times like the 1950’s and 1960’s the top marginal tax bracket was 70% or more. Today upper 5% of income earners are bitching up a storm because they might be subjected to an increase in top marginal rate from 36% to 40% as the supposedly temporary Bush tax cuts are extended ad infinitum past their expiration date last year.
There are two basic problems confronting us. Rampant inefficient ever expanding government spending coupled with a political incapacity to actually collect enough revenue to support the spending. Future liabilities have been growing at an unsustainable rate for decades. We really need to get back to the progressive tax structure of the 1950’s and 1960’s at least long enough to get the books balanced again and we really need to reign in spending, big time, like we’ve never done before. This notion that the free market will do this of its own accord is pie-in-the-sky and that’s the pie Spencer seems to be offering up in this book.
There’s boneheaded liberalism and there’s boneheaded conservatism too. We appear to be stuck with nothing but boneheads of one kind or the other taking turns running the country. In both cases they’re both just taking turns running it into the ground.
Roy, I tend to agree with many of your points. However, without a level playing field people can become wealthy through manipulation and abuse rather than invention. There is a long history in America of those who’ve used either politicians or political power in this way. I intensely respect those whose ideas make our lives better. I have nothing but contempt for those who achieve the same results by making others poorer. When you cast things as simply envy of the “well-to-do” you do not distinguish between these two paths. This becomes a variation on “the end justifies the means”, IMHO.
PaulID says:
July 5, 2011 at 11:21 am
“I am a homeschooler and this book will be on my must purchase list for the start of school this fall.”
I just finished homeschooling my third and last child who graduated right on time with her non-home schooled peers. My previous homeschooled child graduated a year early and entered college a year early and the one before that graduated on time but already had a thriving computer business going when he graduated. None were homeschooled longer than two or three years (10th, 11th, and 12th grades).
The big difference is my children were completed grades 10, 11, and 12 in a single year and so we had two years for something else constructive to occupy their time. The last one really loves working with animals and so while her peers were struggling with finding the time to complete ancilliary public education garbage courses and commuting and social issues like having the right clothes and makeup and membership in cliques mine was enrolled in a two year apprenticeship program for professional dog trainers and in October when the next certification exam is given will be the youngest certified dog trainer in the United States for about 6 months. Now THAT’s what I call successful home schooling. Getting the education you want and need to be happy and successful and not wasting time with things you don’t need and don’t want is my idea of what education should be about. In reality public education, especially at the higher grade levels, is about forcing all students through the same politically correct indoctrination mold. Screw that. I’m SO glad to have lived in Texas where you can pull your kid out of school whenever you want and no one really cares why or how you propose to finish their education yourself. .
Anyhow, I wouldn’t make anyone waste time with Spencer’s “economic” diatribe if there were any possible way to avoid it. Given it isn’t likely to become a best seller in any category avoiding it is as easy as falling off a log.
anna v says:
July 5, 2011 at 11:49 am
Try any site that specializes in economics. While the US does manufacture a lot of arms, it’s only a few percent of total manufacture. The fact that you believe that most US manufacture is in weapons just goes to show how biased your sources are.
I just watched the movie “John Q” with Denzel Washington. It was blatant propaganda. But, what most struck me, was thinking about the effect government run health care would have on all the people working so hard to get that dead organ donor life-flighted to an ER capable of harvesting the heart and then transporting it across a vast country to the boy who needed it. While Obamacare might guarantee the boy a right to transplant surgery without insurance hassles (replaced by endless government red tape), I doubt that enough economic incentive would be left to actually get many hearts to where they were needed. Everybody could feel good about the system where every one was equal regardless of means. But, in the end, we’d all be worse off and those with means will just be jetting to wherever it is that all the doctors have gone (somewhere in the Caribbean would be my guess).
I am driven by envy of course of anyone who has an idea.
http://youtu.be/ur5fGSBsfq8
I can’t open the first pages link for some reason.
Jeremy says:
July 5, 2011 at 12:56 pm
“I’m not sure why it seems necessary to tell people they should put blinders on, lock-in on some long-term job stability and constant saving to achieve a proper retirement. That is quite narrow-minded and likely foolish advice.”
It used to be sound advice and for protestants a religious imperative to live below your means and reinvest the difference. Protestants didn’t invent capitalism but as far as I know they were the first to make a religion out of it and did so centuries ago during the Protestant Reformation. The printing press really turned the tide. Some rebellious churchgoers figured hey, we don’t have to be rich to have our own copies of the bible and don’t need an expensive overbearing church and clerics to tell us what it says. So they started reading the bible at home themselves and in small groups and with the time and energy saved were able to start their own businesses and by living humbly as the bible suggests keep reinvesting the windfall. I suppose you could call that home bible schooling.
Living below your means is always advisable. Couple that with finding things to do with spare time that is both productive and enjoyable is the next most advisable thing IMO. It’s hard to go wrong on that path. Great expectations go hand in hand with great disappointment so caution is advised. But there’s more than a grain of truth in “all work and no play makes Jack a dull boy” so the key is finding work that’s as enjoyable as play and have no expectations about it beyond leading a happy productive life. There’s nothing terribly wrong of course in shooting for the stars through something like writing the next great best selling novel or the next “killer app” for personal computers and things of that nature but one should be advised that there’s ten flops for every success and life is too short to accomodate ten flops so you’d better enjoy the hunt and not be terribly disappointed if each hunt doesn’t end in glory.
At any rate I know far more people who eventually became financially independent through a strong work ethic and living below their means than I know people who spend faster than they earn. The former path is still the surest way to financial independence but it takes 20-30 years and that’s a tough pill to swallow in post-modern US culture where “Let’s party like it’s 1999” is so popular. This attitude has prevailed for a few decades in the federal governmetn where they been partying with borrowed money like there will never be a time when the bill comes due. If you dance to the music you have to pay the piper.
Dr. Spencer,
I will read it.
Perhaps it will take a place in my bookcase next to my dog-eared copy Henry Hazlitt’s short book “Economics in One Lesson”.
John
Lichanos says:
Things have moved on a bit since the18th century days of sole proprietorships. And as Polyani argued in The Great Transformation, those days of liberal/capitalist dominance were large engineered by the state. A ‘free’ market didn’t just spring up from enthusiastic individuals.
Forgive me if I read you wrong, but surely you’re not suggesting that ‘free’ markets were only invented in the 18th century? Try telling that to the 12th century smithy who provided his skills and toil in exchange for food stuffs, or protection by the local nobles. I’m sure Blogg and Glogg would also disagree. Sorry, Bud, but the first ‘free’ markets did exactly spring up from enthusiastic individuals. As Spencer puts it “A society is lifted out of poverty by a free people developing new ways to provide more goods and services people want, with less effort.” The state didn’t event the press; Gutenberg did. The state didn’t invent the light bulb; Edison did. The state didn’t start distributing tools in my area that I can use in my factory; the new sales representative hired to service my city by the national manufacturing company did. The state didn’t open the small corner store at the end of my block; the immigrant family from India did.
The theories of Polyani? OMG! What else would we expect of some pseudo-intellectual socialist? In my experience (of which there is plenty), show me a sociologist / economist with a pet theory on “how things really are”, and I’ll probably be looking at someone who’s willing to suborn reality in order to fit his pet theories. Kinda reminds me of several (in)famous individuals that are discussed on this blog quite frequently. And, honestly, a discussion of some obscure effete-intellectual couldn’t be more boring. If you haven’t noticed, the economies that have been founded on theories of social equality or social justice have mostly been left in the dustbin of history. Only a few select totalitarian regimes remain. And as soon as Fidal kicks the bucket, there will be one less. Forget about theory. That’s reality. Maybe, just maybe, mankind might one day truly reach that socialist utopia. But it won’t be in any of our lifetimes. And it won’t be because of the ‘state’. It will be because the human condition has improved to the point that want and need are no longer an issue.
From the few pages made available at Fundanomics.org, I agree with Spencer’s basic point that individuals are the ones who are best at deciding what’s best for themselves. As he writes, his book’s central theme, which he does not believe has been emphasized enough in books on basic economics is that “The most fundamental motivating force for prosperity is people being allowed to provide as much stuff for each other as they want and need” with Freedom being the foundation. In other words, the message to government, bureaucrats, technocrats, or any other ‘elite’ who thinks they know what’s best for all of us, is to get outta my way. Screw ‘the state’. To that, I say Hear Hear!
With respect, these ideas are widely discredited by reality. History shows a progressive tax structure brings in less tax for many reasons, not the least of which is the wealthiest have the easiest means to pack up and leave, taking their wealth with them.
You’re on absolutely the wrong track talking about tax rates. If you want to increase tax revenues, lower the rates. A broad, flat and low tax system is the way to maximize revenue. That’s why Russia adopted a flat tax years ago.
You’re also wrong about the so-called ‘Bush tax cuts’ as those cuts made the tax system more progressive, not less, by taking millions of Americans off the income tax roles. Again, history shows 2007 as the year of record tax revenues.
anna v says:
July 5, 2011 at 11:49 am
Mark Wilson says:
July 5, 2011 at 10:26 am
Maybe I should have put “sarcasm on” and “sarcasm off” on the haircuts and manicure.
I would be interested to see links that show that offshoring industry created more jobs in the US.
Also links on manufacturing. I have the impression that the US is only manufacturing arms related products, which matches the continuous wars. Even there though, much electronics is outsourced, from what I have read.
Also links on the health of the middle class in the recent years. You think that the recession is a sign of affluence?
One hardly knows where to begin but. judging by this comment thread, it would seem safe to conclude that the conventional wisdom on economic mythologies makes the “consensus” view of the climate look like flinty eyed realism
Your semi sarcastic reference to haircuts and manicures, brings to mind the fact that those “checks and balances” that you seem so enamored of, have most recently been expressed in a dramatic expansion of the number of jobs that are now subject to governmental licensing requirements, now literally tens of thousands, with the only check being on competition and the balance tipped heavily in favor of incumbents, with invisible benefits for consumers but highly elevated costs. This, of course, should not be surprising since the Nobel Prize for Economics some years ago went to a guy, whose name escapes me at the moment, whose life work fairly thoroughly demonstrated that governmental regulatory schemes inevitably devolve into protecting the corporations they were meant to regulate from the vagaries of the market.
Regarding your questions about outsourcing. There was a large study released a while back which dealt with 2500 U.S. corporations who operated in the global economy over a period of close to a decade in the 00s. The upshot of it was that for every job they outsourced overseas they created two jobs in the U.S. In terms of technology, there is also a piece which discusses the breakdown of where the benefits $400 price of an IPhone end up, Much more than half stay in the US to pay for design, engineering, and marketing. China, whose Made in tag is on each one, garners six bucks and change for providing the final assembly.
The US is still by far the largest manufacturer in the world. Our manufacturing sector by itself would be the 8th largest economy on the planet. Our annual man. output equals or exceeds the combined output of the BRIC(Brazil, Russia, India, and China) countries.
I got most of this from economist Mark Perry’s blog and I could have gone back to provide direct links to each of these stories, but I think you would benefit greatly from some time spent searching through his archives for them, As the nun’s at my old Catholic school always said, you’ll learn more if you look it up yourself.
http://mjperry.blogspot.com/
Mark did a WSJ op-ed on this topic which provides a nice overview
http://spruce.flint.umich.edu/%7Emjperry/MPerry_WSJ_TheTruthAboutUSManufacturing.pdf
The blog list on his sidebar provides links to many other valuable resources of economic info.