All I Really Need to Know About Economics I Learned From my Grandparents

The crisis in the financial markets and the federal response to it has created a renewed interest in economics. We are hearing about Keynes, the Austrian school and various other dead academicians. The ghost of Malthus was even spotted advising Nancy Pelosi to include contraception funding in the stimulus package (where is Saturday Night Live when we need them?). Old Adam Smith is still invoked to justify corrupt banking tactics. Karl Marx has remained out of sight, but his specter still haunts economic discourse.

When I was in school, economics was part of the social sciences. There is, however, little about economics which rises to the level of science. If you locked all the economists in the US in a convention hall with no food and charged them with identifying three economic ideas that 90% of them agree on, they would resort to cannibalism before they finished the job. The economists who have had the most enduring impact, have really not thought of themselves as economists. They have understood that economics is inevitably linked to philosophy and politics. Adam Smith’s economic ideas are more a reflection of the Calvinist individualism of 18th century Scotland than they are a result of empirical research. Keynes’ work largely reflects the patrician sentiments of early 20th century English elites. God only knows what went wrong in Karl Marx’s life, but one has to admire the scope and audacity of his tortured vision. I only wish modern economists were as transparent about their assumptions.

“All I Really Need to Know I Learned in Kindergarten” was a very popular book by Robert Fulghum published about fifteen years ago. Coming from a family of educators, I kind of bristled at the title. There must be some reason we go to school all those other years. The book has an endearing simplicity that made a lasting impact on millions of readers. As we listen and participate in this national economic policy debate, I want to assure you of several very important points. First, economists know far less than they would like you to think. What they think they know has much more to do with the fundamental assumptions they bring to the discipline than it has to do with the scientific method. Secondly, you know far more about economics than you think. In the spirit of Fulgham’s book, you can think of this as “All I Really Need to Know About Economics I Learned from My Grandparents”. Here are fifteen things you probably know about economics that all economists should know too.

1. Work hard and plan ahead to provide for yourself and those you love..

2. Expect trouble in your life and prepare for it. A stitch in time saves nine. Some problems do not have good answers.

3. The more you give, the more you receive. When you give, do it quietly. When you receive, be grateful.

4. Some people really need help. Help if you can, but be careful how you help. It’s not about you feeling like a nice person.

5. You will make some mistakes and catch some bad breaks. Get up, learn from your falls and get back at it.

6. Be honest and fair with everyone.

7. Live within your means and save for a rainy day.

8. Money can’t buy you love. Don’t be a slave to money. There are far more important things in life.

9. Enjoy people and be generous to the stranger you meet on life’s road. Don’t be too troubled by the ones who do you wrong.

10. Don’t envy others. Let your own joys and sorrows be sufficient for the day.

11. Pay your taxes and hold the government accountable for their use. Advocating higher taxes for others does not make you a generous person.

12. If something seems too good to be true, it probably is.

13. If something seems too complicated to be good, it probably is.

14. Big organizations tend to be clumsy, bureaucratic, political, inefficient and impersonal. Avoid them when possible.

15. Financial problems usually have a deeper root cause. Since money is seldom the real problem, more money is seldom the real answer.