I don't post much, but I've been apart of the GB family since day one (we're talking ArrowPointingDown podcast days). I love me some video games. This past year I've asked myself the big questions in life. I mean the REALLY big questions. I'm relatively at peace now, but I discovered two giants along the way and I wanted to share them with you and see what you guys think.
First up is Thomas Sowell. He is an 81 year old African American Economist. He never knew either of his parents. He grew up in Depression-Era Harlem. He graduated magna cum-laude from Harvard with a BA in Economics, then graduated from Columbia with his MA in Economics, and finally got his Ph.D. in Economics from the University of Chicago -- still a Marxist during this period. Even at Chicago he studied under Milton Friedman, Mr. Capitalism himself, and was STILL a Marxist! It was not until one summer when he got a job at the Labor Department in the government did he do a complete 180. As he described it, "I looked around and thought to myself 'these people are not going to save us.'" Who are "these people" he talked about? The politicians/bureaucrats in Washington DC. Since that fateful summer, Thomas Sowell has written over 30 books promoting the idea that society does better when the government is less involved in our lives.
I HIGHLY recommend reading his Basic Economics 4th edition. No charts. No graphs. Just plain language about what an Economy is and how it works. Here's a sample of from Google Books.
Next up is Milton Friedman. After reading Dr. Sowell's books, I decided to seek out the man who taught him. If Thomas Sowell is Mace Windu, then Milton Friendman is definitely Yoda. I became an INSTANT fan of Milton Friedman's when I saw this 2:24 clip of him talking to Phil Donahue about greed and capitalism.
Hot Damn! That's such a great question: what is "greed"? We should live in a society where individuals are allowed to pursue their own self interests.
It's true that capitalism is not perfect, but that's because human beings are not perfect. This is not a perfect world. Think for a moment about honesty. Imagine how much richer we would be as a society if we were all honest. I got in an argument with a girl about why a grocery store does not locate in a poor neighborhood. She said it's because the store did not want to ruin its image. My answer to her was that stores don't get built in poor neighborhoods because it's inherently riskier to build them there. To lower that risk the store needs to get insurance, and politicians mandate that insurance policies cover all sorts of things. In addition to insurance, the store will need security in the form of guards, cameras, and alarm systems -- all of which costs money (the guard needs a salary and benefits, the cameras need operators and maintenance, and the alarm system needs testing). In order to pay for that security, the store must raise the prices of its goods. The higher prices hurt the already poor neighborhood. So the store then locates in a safer neighborhood because there is less risk involved. Less risk means less security required, which means lower prices. If the store did not have to worry about vandalism and theft, then they would gladly locate in the poor neighborhood. The location of a store can make the difference between going bankrupt and making millions.
What eliminates poverty? Thomas Sowell says wealth is ultimately the only thing that can reduce poverty. What creates wealth? Thomas Sowell says wealth is created when those who already have it are free enough to be able to create more of it (e.g. think about how much wealth Steve Jobs created at Apple -- how many people are richer because of Apple?)
I'm so curious to know what you guys think. Do you guys agree with Thomas Sowell and Milton Friedman? What is greed to you? What do you think eliminates poverty? Am I right or wrong in my story about the grocery store in the poor neighborhood?