The concepts of economic systems can seem rather intimidating at first--supply and demand, unemployment, inflation, money supply, GDP growth, and so on, can seem comparable in complexity to computing jargon. This is not helped by our current government and media who seem to throw around vague economic concepts as if they have such great complexity that no mere mortal can dare to attempt to understand any of them (only our beloved “experts” can give us even a sliver of enlightenment). But economics is actually really simple. You see, a large economy like the US is simply made up of millions of individuals and corporations who interact on relatively simple terms. Economics happens when you go to Walmart and buy groceries or even a TV. Even if you were to be stranded on a deserted island, your very survival depends on economics, but in a vastly simpler, less interconnected way.
Once the grand economic concepts are brought down to the level of the solitary caveman, they are relatively easy to figure out. After figuring out how these concepts apply at the caveman level, you have a basis to scale that understanding upwards, seeing a large economy as simply a vast number of interacting cavemen. This is a calculus-style approach--understand the problem in one instance, and scale it up to a very large number of small instances. I plan this post to be the first in a series of posts using the Caveman Economics (calculus-style) approach to explain economic principles from the ground up.
I don’t remember when I discovered what I consider to be the foundational principle of economics, but it wasn’t in school. Somehow the textbooks seem to have missed the most important concept. This most important thing is that all economics is based on work. How can this be so? Let us take the Caveman Economics approach. Imagine you are marooned on a deserted island. Essentially, you have just been made a caveman. How does a caveman survive on an island with no-one around (think Castaway starring Tom Hanks)? Obviously there are certain needs that must be met. You will need water, food, and shelter. How do you go about obtaining these things? You will have to explore your new home to find a freshwater stream that you can drink from. You will probably then look for a cave near the stream, so that you don’t have to try to build something without tools. You will also look for some fruit or something that you can eat without having to cook it. That will get you through the first day. Every single thing you have to do to survive (even for just one day) requires work. If you don’t work, you won’t eat, you won’t sleep safely, you won’t drink; you will die. The Bible said this years ago: “If anyone will not work, neither shall he eat.” (II Thessalonians 3:10). Work is necessary for survival, and is thus the cornerstone of economics, because the first concern of economics is satisfying the needs of man.
Stay tuned for more Caveman Economics...
Once the grand economic concepts are brought down to the level of the solitary caveman, they are relatively easy to figure out. After figuring out how these concepts apply at the caveman level, you have a basis to scale that understanding upwards, seeing a large economy as simply a vast number of interacting cavemen. This is a calculus-style approach--understand the problem in one instance, and scale it up to a very large number of small instances. I plan this post to be the first in a series of posts using the Caveman Economics (calculus-style) approach to explain economic principles from the ground up.
I don’t remember when I discovered what I consider to be the foundational principle of economics, but it wasn’t in school. Somehow the textbooks seem to have missed the most important concept. This most important thing is that all economics is based on work. How can this be so? Let us take the Caveman Economics approach. Imagine you are marooned on a deserted island. Essentially, you have just been made a caveman. How does a caveman survive on an island with no-one around (think Castaway starring Tom Hanks)? Obviously there are certain needs that must be met. You will need water, food, and shelter. How do you go about obtaining these things? You will have to explore your new home to find a freshwater stream that you can drink from. You will probably then look for a cave near the stream, so that you don’t have to try to build something without tools. You will also look for some fruit or something that you can eat without having to cook it. That will get you through the first day. Every single thing you have to do to survive (even for just one day) requires work. If you don’t work, you won’t eat, you won’t sleep safely, you won’t drink; you will die. The Bible said this years ago: “If anyone will not work, neither shall he eat.” (II Thessalonians 3:10). Work is necessary for survival, and is thus the cornerstone of economics, because the first concern of economics is satisfying the needs of man.
Stay tuned for more Caveman Economics...
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