The Young and the Economically Illiterate

Occupy_London_banner[1]This article was originally published at ValuesandCapitalism.com on January 23, 2013.

Earlier this month, the Higher Education Research Institute reported that today’s young people are more narcissistic than ever. Our drive to succeed surpasses that of our parents. We expect a great future for our generation. Our intellectual, leadership and social self-confidence are at all-time highs.

Exciting, right? Doesn’t personal ambition drive innovation and progress? Isn’t self-interest the fount of the invisible hand’s innumerable blessings?

Under the right circumstances, yes—unwillingness to settle for one’s current state of affairs is a healthy incentive for entrepreneurial innovation. “The mark of the creative mind,” economist Ludwig von Mises wrote, “is that it defies a part of what it has learned or, at least, adds something new to it.”

But considering the economic beliefs of the average American young person, this news couldn’t be worse.

The fact is, most of today’s young people are economically illiterate. Most don’t understand how the economy works, or what drives economic progress. Most have no commitment to the notion of earned success. This was demonstrated by a recent paper by University of Pennsylvania economists Bhattacharjee, Dana and Baron in a 2010 paper. Citing multiple surveys of consumers’ opinions regarding profit and social value, they write:

We find a strong negative correlation between perceived profit and social value across both industries and specific firms. People report little faith in the power of markets to create and reward value, neglecting the incentive properties of profit and focusing instead on the perceived intentions of firms.

Holding profit and social value to be at odds defies even the most cursory understanding of economics. Profits, of course, do not detract from a firm’s social value, but are simply the reward for efficiently satisfying consumer demand. High profits are earned by those who most deftly meet the needs of their fellow human beings. A rejection of the notion that profit correlates with social value, then, reveals a deep ignorance of any and all economic theories.

But scientific surveys are hardly needed to uncover the economic illiteracy of the Millennial generation. It was my generation, indeed, who assured the eight-year presidency of progressive Barack Obama. It was this generation who hailed Obamacare’s victory over the largely unwilling elderly population. And it is the Millennial generation who overwhelmingly support mandated forgiveness for their unforgivably high levels of college loan debt.

Ironically, this same generation is the most educated in all of human history. Never before has public education been so readily available to every single child, and a university education as easy as a single FAFSA application. Even further, the Internet has made information freely available to anyone with access to a public library.

In that light, the economic ignorance of today’s young people is truly sobering.

But the dangers of ignorance itself stand pale in comparison to the hazards created by ignorance accompanied by a drive to succeed—the very combination possessed by young people today. In fact, the more “educated” an economically illiterate individual, the more likely he or she will advance ideas wholly antithetical to economic progress and human flourishing.

This happens all the time. Well-meaning individuals seeking to benefit their fellow men unknowingly plot the world’s economic demise with various welfare, entitlement and regulatory schemes they wrongly think to be steps toward equality and social harmony. The more educated these individuals are, the less likely they will be persuaded of their mistake. As Isabel Paterson wrote:

Most of the harm in the world is done by good people, and not by accident, lapse, or omission. It is the result of their deliberate actions, long persevered in, which they hold to be motivated by high ideals toward virtuous ends … when millions are slaughtered, when torture is practiced, starvation enforced, oppression made a policy, as at present over a large part of the world, and as it has often been in the past, it must be at the behest of very many good people, and even by their direct action, for what they consider a worthy object.

Unless young people recognize the unwavering power of economic law and accept the insights of praxeological science, my generation’s entrepreneurial energies will be spent in vain. Their arrogant attempts to conjure wealth, avoid fiscal austerity and thwart unstoppable market forces will crash and burn.

Read the article at ValuesandCapitalism.com.

What if Money Was No Object?

Money_closeupThis article was originally published at ValuesandCapitalism.com on January 10, 2013.

“What would you like to do if money was no object?”

This is the question asked in a trending Youtube video narrated by the late philosopher Alan Watts. It encourages young people to live and dream as if money didn’t matter—as if money was no object.

Inspiring, to say the least. The notion of dreaming and living without regard for financial reality can open the imagination to entire worlds that money had rendered unrealistic.

But profound narrative, dizzying imagery and hypnotic music aside, this video reveals an attitude about money that is hostile to economic prosperity and, more importantly, living a moral life. For despite what Alan Watts, Hollywood and Occupy Wall Street might say, money is a vitally important feature of the social world that we simply cannot do without, and using it is a moral issue.

First, money is simply a medium of exchange, and recognizing its usefulness is a good practice.

Whereas some activists might cite money as the root of evil and social injustice, that is simply not true. As every student learns in Economics 101, money is purchasing power. It represents the ability to acquire material ends. Those who most efficiently supply the needs of their fellow human beings will earn the most money.

For example, consider money’s origins. In the ancient world, barter trade was man’s primary means of exchange. If John wanted apples but produced only oranges, he traded oranges for apples. If, however, no one with apples wanted his oranges, he was out of luck. But instead of simply going without, John would trade his oranges for something the apple-growers wanted—like grapes—and then trade those grapes for apples.

After a while, others caught on to this means of barter, and different media of exchange arose. All members of John’s society began to accept gold coins in exchange for their goods, knowing that these coins could then be exchanged for anything. Gold became money.

Money, then, is both a media of exchange and a means of calculation. It allows individuals to acquire things they want and to more precisely determine the value of their goods and services.

In that light, why ignore money? Why pretend like money doesn’t exist when choosing a career? Yes, money restricts options and makes some dreams impossible. But without money, there would be very few dreams whatsoever.

While pursuing a life in which money doesn’t matter may be exciting, it is a total fantasy.

Second, God has much to say about money, and none of it involves pretending it doesn’t exist.

Both the Old and New Testaments are littered with hundreds of verses about money. Common to all of these verses is the idea that the creation and use of money is a moral exercise. Whether it is God’s command to “use honest scales and honest weights” (Leviticus 19:36), His rejection of “diverse weights” and “false balances” (Proverbs 20:23) or his lament that Israel’s “silver has become dross” (Isaiah 1:22), it is clear that money is significant to God’s law and human life.

One particularly revealing issue is debt. Unfortunately, debt is all-too-common among American young people. According to the Federal Reserve, 37 million young people have outstanding student loans. What is not so common, however, is seriousness about making debt payments. According to arecent uSamp survey, the vast majority of those who have not paid off their student loans want those loans forgiven. While those answering the survey may never consider the ethical issues involved, repaying debt is a moral imperative.

In Romans 13, Paul writes that Christians should “Owe nothing to anyone—except for your obligation to love one another.” David writes in Psalm 37,”The wicked borrows and does not repay.” In short, the importance of repaying loans cannot be more explicit. If one contracts to borrow money from another, that contract should be upheld. Defaulters should be penalized.

Undeniably, money matters to God. Debts should be repaid. Budgets should be kept. Forced loan forgiveness and dishonest inflation should be rejected and condemned. These are moral imperatives. To live as if “money was no object” is a dereliction of moral duty.

Finally, while living as if money doesn’t matter may be exciting, such a life is available only to those with money to spare.

Try telling a single mother of two that money doesn’t matter—that her career path shouldn’t be determined her ability to provide for her family. Or consider an unemployed graduate with no means to finance his college debt payments. For them, of course, money matters.

But perhaps the absence of want is why today’s young people are so repulsed by money. Generation Y is the most materially blessed generation in recorded history. When it’s a given that there will be food on the table every day of the year, it is easy to forget the importance of money as a necessary means to sustain life and cultivate a healthy society. But that doesn’t change the fact that money is important.

Like it or not, money is dinner. Money is education. Money is life-saving medical technology. Of course, there are more important things in the world than being rich. But the existence of money is an unavoidable feature of social life that everyone should consider—especially when making career decisions.

For further reading on this issue, see my article Where Money Meets Morality.

Read the article at ValuesandCapitalism.com.

Three Ways to Defend the Free Market

Lucky number threeThis article was originally published at ValuesandCapitalism.com on January 4, 2013.

Each year, almost 50 percent of Americans make New Year’s Resolutions. Most often, these include things like losing weight, working harder or spending less. Whatever they may be, the common thread among them is that they involve things we deeply care about—things we think deserve more of our time and effort.

In that light, it only makes sense that the free market should, in some form, be among our New Year’s Resolutions. And if this year is anything like last year, the free market will need all the support it can get. As critics of the free market grow stronger, it is up to liberty’s advocates to counter those attacks.

So this year, make defending the free market one of your resolutions. Commit yourself to discuss the ideas of liberty with friends and neighbors. Here are three tips to help you get started:

1. Raising questions is always better than giving answers.

Capitalism defends itself. It is logical, coherent and well-supported. The last thing it needs is your careless, back-of-the-napkin arguments that can sometimes do more harm than good.

Instead of arguing defensively with your friends, try raising some interesting questions. Ask them about their beliefs. Why do they think like they do? What do they think about our economic future? How do they propose the government deal with things like inflation, student loan debt and gun control?

If you’re like me, you’ll quickly find that questions build bridges and create mutual understanding. If you’re lucky, your friends will begin to seriously consider their own opinions, and will become more open to listening to alternative points of view. Helping others come to their own opinions will create more lasting change than asking them to adopt yours.

2. Everyone deserves respect, no matter how mistaken they may be (yes, even your crazy socialist uncle).

Granted, respecting your opponent can be difficult. How can someone be so educated, you might wonder—and yet wrong? How can that friend of yours be so blind to the harms of government debt when they have experienced the pains of bankruptcy in their own life? What makes your unemployed neighbor believe that investing more in the same government policies will help her get a job?

But the fact is, many people who are “hopelessly wrong” have the best of intentions in mind. Socialists believe their policies will bring economic fairness. Occupy Wall Streeters believe big banks harm the poorest of the poor. Progressives believe that more deficit spending will alleviate, not intensify, the current unemployment crisis. Only crazy people support ideas because they want to bring destruction and poverty to their fellow human beings.

So instead of snubbing your intellectual opponents, draw upon their good intentions for your noble purposes. Show them the free market is the solution they are looking for—not an oppressive, evil monster. Make sure they understand that you support the free market because you think it is fair, moral and wealth-generating—not because you are greedy and selfish. Most importantly, help them know that you are as concerned as they are about the plight of the poor, disadvantaged and unemployed—you simply believe the free market is the best solution.

In little to no time, you’ll find that your friends and neighbors will start to be more attentive to what you have to say. As in all areas of life, your respect for others will translate into their respect for you.

3. Use your resources.

Like it or not, no one is going to change their worldview because of a 30-second coffee break conversation. Even if they are proven totally wrong, most of us would rather continue to argue bad ideas than embarrassingly admit defeat.

So instead of arguing, point your friends to some of the thousands of liberty-related resources available in print and online. Email them an article and ask them to respond. Send them a book about an issue you know they care about.

In fact, this is precisely why organizations like the American Enterprise Institute exist. Their scholars have studied these issues for decades and have prepared arguments that—like it or not—are stronger than yours may ever be. Whether Ludwig von Mises on socialismCharles Murray on welfare policy or Arthur Brooks on the morality of capitalism, scholars throughout the ages have advanced and defended the very arguments you are trying to make. Use them!

The ideas of liberty have been growing and evolving for centuries. You have no reason to fight the battle alone.

Read the article at ValuesandCapitalism.com.