Todd G. Buchholz - New Ideas from Dead Economists: The Introduction to Modern Economic Thought, 4th Edition

Nonfiction

New Ideas from Dead CEOs

The Price of Prosperity

Rush

From Here to Economy

Market Shock

Bringing the Jobs Home

Fiction

The Castro Gene

Vincent van Gogh painted twenty-eight portraits of himself in just two years! I have avoided such introspection and have managed to keep both ears attached to my head. I had not read New Ideas from Dead Economists since early 1989, when I delivered a manuscript to the offices of E. P. Dutton for its hardcover debut. I suppose some authors reread their works often, reminiscing about a skillful turn of phrase or prescient thought. Rather than reread my work, I continually watched the world economy over the subsequent years to see how the books ideas and the great economists ideas held up. This newly revised edition benefits from a careful study of economic trends and crises from my perch as a White House economist, Wall Street adviser, investment fund managerand father. I was none of those when I drafted the first edition.

The world has changed in staggering ways. Mostly for the good. New medicines, new technologies, more jobs, less inflation, and less crime have blessed the United States. In 1989, we had no Internet, no anti-baldness drugs, few automobile airbags, and no hope that the jobless rate could plunge below 5 percent or that U.S. stock prices would more than triple during the 1990s and then jump by another 75 percent in the early 2000s (with some cliff-hanging moments along the way). The pandemic in 2020 did not bring massive bank failures and soup kitchens like the Great Depression of the 1930s did, but instead a Great Cessation as people were forced to stay in their homes and away from shops and friends.

In the years since the first edition, we have also witnessed a phenomenon I call the scissors economy. Technology has permitted Americans to cut out the middleman from many purchases. Who needs a stockbroker or an insurance agent when the Internet allows people to comparison shop? You can buy a sockeye salmon direct from Alaska within seconds or an airplane ticket to Timbuktu. Consumers have more control than ever before and can customize purchases with an ease that only a prince or a potentate could have afforded in past epochs. Even bespoke dog food can be ordered online, tailored for a hounds age, weight, fur type, and preference for poultry, bison, or vegan protein.

In a tech-driven economy, consumers spend more of their income on digital products like video games and streaming entertainment. Digital products often have zero marginal cost, meaning the seller does not pay much to make an extra copy. In past eras, vinyl records, cassette tapes, and CDs were made up of advanced plastics, pressed and assembled by machines, and then shipped to stores. Every time a music studio churned out another record, it spent money on raw materials, processing, and shipping. Today, when artists invite you to download a tune, your extra download costs them virtually nothing. Of course, plenty of resources may go into the initial creation of an item. I co-founded an educational software company that makes math games for children based on the Math Arrow matrix. Designing the game, writing software code, and hiring cartoonists to draw Kyle the Kangaroo cost a great deal. But when a parent or child downloads the game to play, it costs the company very little. This model is vastly different from what Adam Smith, our first great economist, encountered in 1776. He observed a pin factory, not bytes zooming through a digital stream.

Across the United States, old monopolistic utilities have broken down as cable, satellites, fiber-optic, and wireless technologies compete for your television, smartphone, and streaming business. Every time your eye catches the glint of a rooftop solar panel on a home, a centralized power company sheds a tear. A striking advertisement once appeared in the Washington, D.C., area, touting a new telecommunications company. Posters displayed a statue of Lenin with a rope around his neck and the headline No Empire Lasts ForeverEspecially One That Keeps You Waiting 5 Hours for a Repairman.