John Tamny - Popular Economics: What the Rolling Stones, Downton Abbey, and LeBron James Can Teach You about Economics

PRAISE FOR POPULAR ECONOMICS

Popular Economics is an essential twenty-first century complement to Henry Hazlitts Economics In One Lesson . In a book that is happily free of charts and incomprehensible equations, John Tamny uses exciting stories from the world around us to show the reader that nothing is easier than economic growth. Popular Economics is the answer for those confused by the dismal science.

Arthur Laffer

John Tamny offers a wide-ranging analysis of some of the most pressing issues facing the American economy today, from income inequality and job creation to budget deficits and tax reform. Through engaging examples and stories, he provides a thought-provoking argument in favor of a free-market approach to economic growth. Whether you agree with him or not, there is no question that his perspective needs to be part of the discussion on American economic policy in the new millennium.

Enrico Moretti , professor of economics, Cal-Berkeley, and author of The New Geography of Jobs

In a revelatory analysis of the so-called financial crisis, John Tamny makes the unexpected case that the actual crisis was the huge banking blunder of betting the investment capital of the U.S. economy on housing, a retrospective consumption good already grossly in oversupply. Confirming the blunder, government under both Bush and Obama bailed out the banks and debauched the dollar, devaluing the entire entrepreneurial economy of the future. Rare is a book so contrary, so pithy, and so true.

George Gilder , author of Knowledge and Power

Want to understand the vital purpose of stable money in a free-market economy? Read John Tamnys chapters on the importance of reliable standardswhether you are measuring ingredients for a chicken wings recipe, constructing a house, or timing athletes running the forty-yard dashand you will fully comprehend that money is meant to provide a dependable measure of value. Tamnys writing throughout this brilliant book rings with clarity and consistency; you will be left wondering why these same qualities dont apply to our money.

Judy Shelton , author of Money Meltdown

Ignore John Tamnys easy to read Popular Economics at your own moral peril. Its as close to spiritual as you get in this realma better tutorial than any econ text. Id make it mandatory for the 95 percent of econ majorsright up through PhDswho never really got the basics. While making you edgy toward the endless societal consensus nonsense that it cuts through like a guillotine, it also frees you to see the true creative beauty of reality all around us.

Ken Fisher , founder and CEO, Fisher Investments

In this entertaining and provocative new book, John Tamny makes the powerful case for freedom as the font of social and economic growth. Popular Economics draws upon a rich collection of both spectacular successes and devastating failures to show how easily attainable prosperity is.

David Resler , retired chief economist, Nomura Securities International

Johns book is many things. Its a great way to learn economics, its a very strong case for economic liberty, and it is an epic myth-buster. I will be giving it out to friends, of all viewpoints, for a long, long time.

Cliff Asness , managing principal, AQR Capital

Copyright 2015 by John Tamny

All rights reserved. No part of this publication may be reproduced or transmitted in any form or by any means electronic or mechanical, including photocopy, recording, or any information storage and retrieval system now known or to be invented, without permission in writing from the publisher, except by a reviewer who wishes to quote brief passages in connection with a review written for inclusion in a magazine, newspaper, website, or broadcast.

Regnery is a registered trademark of Salem Communications Holding Corporation

First ebook edition 2015

eISBN 978-1-62157-392-0

The Library of Congress has cataloged the hardcover edition as follows:

Tamny, John.

Popular economics: what the Rolling Stones, Downton Abbey, and LeBron James can teach you about economics / John Tamny.

pages cm

Summary: John Tamny uses entertaining stories from sports, movies, popular culture, and famous businesses to explain the basic principles of economics. His Popular Economics is an everymans guide to how money really works-a lesson politicians try (and fail) to grasp every day. -- Provided by publisher.

1. Economics. I. Title.

HB171.T24 2015

330--dc23

Published in the United States by

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To my wife, Kendall. Thank you for all of your love and support, and most of all for the inspiration without which there would be no book.

CONTENTS

Y ou hold in your hands one of the most subversive economics treatises since Karl Marxs Communist Manifesto , published in 1848, or John Maynard Keyness General Theory of Employment, Interest and Money , published in 1936. While Marx desired to undermine the social order of free markets, property rights, and minimal government, John Tamny wants to restore what was in place before the past centurys Great Depression and two world wars. Indeed, he would strengthen the freedom-enhancing and prosperity-creating institutions and practices that flourished before these twentieth-century calamities. While Keynes wanted government to steer the economyas a driver does an automobile (an utterly illusory goal)through manipulations of money, interest rates, taxes, and government spending, Tamny wishes to do the opposite: slash tax rates, radically simplify the tax code, let markets set interest rates (the Federal Reserve would ultimately be consigned to the Smithsonian), institute a gold standard to stabilize our money, end government bailouts of all kinds, and cut government to the minimalist role originally envisioned by our Founders.

There are many people who share Tamnys goals. However, he sets about his liberty revolution by unleashing a most potent weapon: this book. Tamny makes the supposedly complex, arcane, equation-dense subject of economicsa discipline that allegedly can only be mastered by a handful of brilliant high priests like Janet Yellen and Ben Bernankeinto something everyone can fully understand. In spirit, Tamny does for economics what the Gutenberg printing press did for the Bible, making a previously inaccessible subject open to all. Equally important, he does to economists what Toto did to the Wizard of Oz : pulling aside the curtain to expose the fraud that has become modern economics.

Tamny understands what all too many dont these days: We improve our standard of living by trading with one another. For instance, say you want to bake and sell cakes. You have to trade to get the ingredients, such as eggs, sugar, flour, and cream; the necessary pieces of equipment, such as an oven and a refrigerator; utensils, such as measuring spoons and cups, and on and on. Billions of such transactions take place every day. Wed still be living in caves if we didnt trade with one another.

Barter, however, is hopelessly cumbersome. Money makes trading products, services, and financial instruments infinitely easier. Money is a claim on these things, just as a coat-check ticket at a restaurant is a claim on the coat you deposited. With money, investing becomes feasible on a massive scale, and its only through investing that we make the advances that increase the standard of living for all. Unstable money impedes trade and investment.