Economics text books tend to be heavy monsters filled with mysterious graphs and complex sentences in small print. They force readers to grapple with terms like “monetizing the debt” and “externalities of production.” Let’s face it: economics has a bad name.

Meanwhile, most of us have only a feeble grasp of what’s going on in the economy. We watch the nightly business report to learn if things are going up or down and if we should worry. But what does it all mean?

Consider Alan Greenspan. At the moment, he’s the Chairman of the Board of Governors of the Federal Reserve System, and is often referred to as the “second most powerful man in America.” Shouldn’t we all know what he’s talking about? Take a minute to translate this Greenspan gem:

“The Federal Reserve must not acquiesce in an upcreep in inflation, for acceding to higher inflation would countenance an insidious weakening of our chances for sustaining long-run economic growth.”

I’m fairly certain that all he means here is that we better fight inflation or we’ll be sorry in the long run. Sure, the meaning is there. Honest. It just isn’t his nature to be clear.

So, this book is not written “chiefly to my fellow economists,” as John Maynard Keynes wrote in the introduction to his “General Theory of Employment, Interest and Money.” This book is for my fellow non-economists, for people like me who get impatient with the verbal gymnastics you hear from people like Greenspan. It’s for those who feel a need–and maybe an obligation– to have a basic understanding of what our golden leaders in the financial centers are talking about, but who don’t have the patience to plow through the megatons of econo-glop you’ll find in the standard college textbook. I can’t promise to explain how to interpret anything Greenspan says; that would be a book about linguistics.

This book won’t offer you a brilliant new theory about why the market crashed in 1929, or whether inflation will make a comeback in the U.S. economy. My aim is simply to make you economically literate, and to make that transformation as smooth as possible. I think people should get a little wiser about our system. As P.T. Barnum said, “There’s a sucker born every minute.” Ideal suckers tend to be ignorant.

I don’t mean to sound like I’m attacking our venerable economists. Those folks have a tough and ambiguous job to do, and thank God someone wants to do it. Their calling is to make some sense out of The Economy–a monstrous fluctuating invisible “blob” that controls all our lives.

What is economics?

For the most part, economics is the study of capitalism. You’ll also hear the terms microeconomics and macroeconomics.

Microeconomics refers to the study of economics on a small scale (micro means small), such as individual households or companies. Macroeconomics refers to the study of economics on a grand scale (macro means big), such as an entire nation’s economy.

So what’s capitalism?

In its simplest form, capital means money, but not the old dollar bills gathering moss under your mattress or getting stuffed into the cash register at your local bar. It’s money that you intend to invest in some venture (notice how close that word is to adventure). You invest because you want to make your capital grow.

Say you really love adventure, and you’ve got this brilliant idea for opening a lemonade stand shaped like an enormous lemon in the heart of Las Vegas. Let’s say your grandmother left you a chunk of money, so you’ve got your capital. But you need two more pieces: 1) A small parcel of prime Las Vegas real estate (preferably right next door to the Luxor Hotel), and 2) A couple of cute teenagers to run the stand–also known as “labor”.

Our capitalist venture needs land, labor, and capital. That, in a nutshell, is the foundation of capitalism.

Nations have revolutions, civil wars, hot wars, and cold wars over this idea. American political parties squabble viciously over their interpretations of how capitalism should operate. Non-capitalists (the communists, socialists, and fascists for example) have much different beliefs they hold equally dear.

Here’s a crucial aspect to our lemonade stand story that explains all the commotion: When you gathered up your land, labor, and capital, and put up your lemonade stand next to the Luxor, no one stepped in to stop you.
This is referred to as the free market.

Another aspect of our lemonade stand story goes hand-in-hand with the free market. It’s called private ownership. That lemonade stand is yours, and you can do whatever you want with it (except for a big long list of things, which I won’t get into right now).
Capitalism means land, labor, and capital working in a free market system under private ownership.
And those other systems I mentioned?

Let’s say a communist comes along to your lemonade stand (usually with guns and army in tow) and he expresses his concern over all the starving and exploited people of the world. You, being a good capitalist, respond by saying, “Well, fine, if they want some lemonade, they can buy some.” This annoys the communist, and he takes your lemonade stand away from you and puts it in the hands of a petty bureaucrat from a small town in Siberia who has never tasted lemonade before.

Or, say a socialist comes along (without the guns and army) and he expresses his concern over all the starving and exploited people of the world. You, being a good capitalist, respond by saying, “Well, fine, if they want some lemonade, they can buy some.” The socialist says, in a soft reasonable voice, “Well, fine, I’m going to take two-thirds of your profits and spread it around. In return, if you get sick or go out of business, I’ll take care of you.”

The worst thing is if a fascist comes along (he’s got an army too, including a unit of specially-trained psychos). He expresses his desire to starve and exploit and otherwise eliminate all the people in the world who bug him. He then checks out what race you are. If you’re the wrong race, he takes over your lemonade stand and sends you to the gas chamber. If you’re the right race, he makes you transform your lemonade stand into a Zyklon B factory, which he will then use to gas all the people of the wrong race. It’s for the good of your nation and race, he’ll say with much marching and drum-beating.

“Wait a minute,” you say, “I still don’t get why economics is a study of capitalism!”

Well, it’s not exactly a study of capitalism. Not precisely. It’s a study of the free market system. The other systems I just illustrated for you have aspects of the free market inherent in them–except perhaps communism. Under communism, you have a centrally-planned economy, where some guy at a desk in Moscow, for example, decides how many and what type of boots the Tashkent Bootery in Uzbekistan will produce. As we all know by now, that system didn’t work out too well.
The free market system is, in a sense, a free-for-all. It’s unpredictable; it can ruin you. It often doesn’t seem fair. Many people struggle all their lives and get nowhere; others know exactly where to spin things and they get richer and richer. They might take advantage of others to do it; they might not.

Here’s where the government comes in, and where the serious squabbles begin. Remember our greedy little lemonade stand operator who didn’t concern himself too much with the starving and exploited peoples of the world? The government wants him to be a better person, and so they will coerce him into doing the right thing. They will take some of his wealth away from him and spread it around (this is called taxing and spending).

Let me back up a little here. Maybe the government will coerce him into doing the right thing. Sometimes. It depends on who is in power, or if there’s a war going on, or if the economy is weak or strong. It depends on public opinion that week. It depends on a lot of things.

The government wants to do some things no matter what’s going on, no matter who’s in power. It wants to make sure it has enough money to continue existing (the government has very strong survival instincts). It also wants to make sure the economy doesn’t go to pieces–that economic chaos doesn’t take over. Economic chaos can take many forms. One example is where money loses its value–referred to as inflation. You want to see some starving and exploited people? Let the value of local currency suddenly go down by half. Another example is depression, where businesses get so spooked they refuse to invest their money, which means no jobs, which means long soup lines.

The government uses two tools to battle wild swings in the market that can lead to inflation or depression. The tools are called fiscal policy (taxing, spending, and borrowing), and monetary policy (controlling the supply of credit, or money available for borrowing). Of course, it’s supposed to use these tools only when forced to, because we live in a free market economy, which means that the government is supposed to butt out.

It’s a very tricky business, and that’s what this book is about.

Years ago, I worked at a big bank on the West Coast. I had a nice office on the 19th Floor of a high rise in San Francisco’s financial district. I admit spending a certain amount of my day staring out the window at the streets below, watching the movement of traffic. I had a view of several busy intersections, and I recall marveling that as long as everyone followed a few basic rules, it seemed to work. For the most part, the cars stopped at the stoplight, waited for pedestrians, and went through when it was their turn. Each player had his own destination, his preoccupation, mood, propensities, and resources. Nobody had a clue (or much cared) where the others were going. It was a picture of ordered anarchy.

That’s how I see the capitalist system.

Capitalists and Anti-Capitalists

Capitalism hasn’t been around long–hardly more than two centuries. Its “grandfather” was an agricultural society called feudalism. Feudalism has nothing to do with feuds. It’s related to an Old English word, feoh, which meant cattle (which, at that time, meant money). It’s the same root word that developed into the word fee.

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Obviously I'm practicing my writing on this web area that you should not be able to see because I need to make thisalgebra unplugged, math book. kenn amdahl jim loatsclearwater publishing company publishes Kenn Amdahl books in Colorado. Clearwater Publishing Company publishes educational fun books. Books include There Are No Electrons Electronics &lt;span class=&quot;style8&quot;&gt;for Earthlings, Algebra Unplugged, Calculus for Cats, Joy Writing: Discover and Develop your Creative Voice, The Land of Debris and the Home of Alfredo. Clearwater also publishes The Barefoot Fisherman: a fishing book for kids by Paul Amdahl. and Economics for the Impatient by C.A. Turner. Our books are about science, math, creative writingg algebra, calculus s, economics, fishing, kids, parenting, education. Curriculums like them, and so do home schoolers. Joy of Writing and The Joy of Writing are not our books, but Joy Writing is. Kenn Amdahl is president. He's a songwriter and author in Broomfield Colorado. Electronics, teaching electricity, teaching math, especially alebra and calculus and creative writing. SAT, LSAT, and other test takers may like these books. They are like books for dummies, algebra for dummies, calculus for dummies, creative writing for dummies, fishing for dummies, parenting for dummies . Or Algebra for Idiots, Calculus for Idiots, Creative Writing for Dummies. Memoir writing or memoir writers may find Joy Writing useful, although it is not The Joy of Writing or the Joy of Sex or the Joy of Algebra for that matter. They are not chicken soup for the writers soul, or algebra for the writers soul, or calculus for the writers soul. They are not strictly speaking Christian or religious or spiritual, but those folks are welcome. Jesus would not disapprove of these books. Jesus might like them. The Rapture of Writing might be a good title. Self-publishers read our books, Dan Poynter is recommended. Top ten bestsellers not on the list. New York Times Bestsellers are loved here. DaVinci Code or Harry Potter fans welcome. Obviously I'm practicing my writing on this web area that you should not be able to see because I need to make this square bigger and have not learned how yet except to type in words, poetry, prose, language, steinbeck type stuff, No Child Left Behind, that's my motto. Naked books, with no girls gone wild, no bikini models no first amendment problems. Sorry, no Jill, no wagner. no amateur index ladies or lightspeed girls or coeds or women. Just books about electricity, like Tesla or Edison might write, books about Algebra like Aristotle might write. Calculus books like Garfield the cat might write. Cat stuff, feline stuff, study guide type raw material. Books for girls who like to read and boys who know how to. Teach yourself math, science, fishing, in clear water or clearwater economics creative writing and poetry. Sing a song. Release a CD Write a book and self publish it. Groups we like include Book Organizations of Colorado, Colorado Independent Publishers Association CIPA Colorado Authors League Rocky Mountain Fiction Writers Pikes Peak Writers Aspen Writers Mountains and Plains Booksellers Independent Booksellers SPAN Small Press Association of North America Publishers Association of the WEst Colorado Library Association Last Note Singers Cottonwood the music group. Edward Ormondroyd and George Garrett gave blurbs to our books </span></div>
square bigger and have not learned how yet except to type in words, poetry, prose, language, steinbeck type stuff, No Child Left Behind, that's my motto. Naked books, with no girls gone wild, no bikini models no first amendment problems. no amateur index ladies or lightspeed girls or coeds or women. Just books about electricity, like Tesla or Edison might write, books about Algebra like Aristotle might write. Calculus books like Garfield the cat might write. Cat stuff, feline stuff, study guide type raw material. Books for girls who like to read and boys who know how to. Teach yourself math, science, fishing, in clear water or clearwater economics creative writing and poetry. Sing a song. Release a CD Write a book and self publish it. Groups we like include Book Organizations of Colorado, Colorado Independent Publishers Association CIPA Colorado Authors League Rocky Mountain Fiction Wri</span><span class="style11">ters Pikes Peak Writers Aspen Writers Mountains and Plains Booksellers Independent Booksellers SPAN Small Press Association of North America Publishers Association of the WEst Colorado Library Association Last Note Singers Cottonwood the music group. Jill Wagner is the actress in the Mercury Mariner TV commercial. Jill Wagner will become a big star and people will google her. That's Jill Wagner, mercuryvehicles.com, TV actress. She's in Vancouver filming a movie.Edward Ormondroyd and George Garrett gave blurbs to our books </span></div>