Seven Economic Truths

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You can learn a lot about basic economics from great quotes. David Bahnsen, author of There's No Free Lunch: 250 Economic Truths, proves how true this is.

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You can learn a lot about basic economics from great quotes.

Here are seven.

1. “…Capitalism is a system that begins not with taking but with giving to others.” — George Gilder

This sounds counter-intuitive, but Gilder is right. The underlying motivation of the entrepreneur is to satisfy not his need, but his customers. That’s his only path to success and profitability.

And once profitable, the entrepreneur invariably puts his new capital to work expanding his business, which in turn creates better products, more jobs, and more wealth for more people.

2. “Nothing contributes so much to the prosperity and happiness of a country as high profits.” — David Ricardo

To judge profits achieved in a free economy without understanding what they mean to the nation at large is a failure to understand economics.

Countries where citizens are generating healthy profits by their individual efforts are countries with a higher tax base, higher research and development, better public services, more robust charity and philanthropy, and ultimately greater happiness and quality of life.

3. “Everyone wants to live at the expense of the state. They forget that the state lives at the expense of everyone.” — Frédéric Bastiat

Our conversations about government spending would be so dramatically different if we first realized that the government has no money to spend that it does not first take from someone else.

Whether it be confiscation (taxation) or debt (future confiscation), government spending, legitimate to the extent that it funds the necessities of government, is always an extraction of wealth from the private sector.

Government needs revenues to function. Everyone agrees on that. But beyond a certain point, who will spend the money more effectively: bureaucrats or the people who worked to earn it?

4. “Differences in habits and attitudes are differences in human capital, just as much as differences in knowledge and skills—and such differences create differences in economic outcomes.” — Thomas Sowell

No attempt to manufacture an equal economic outcome can ever succeed. This quote explains why: differences among people—such as their habits, abilities, attitudes, and goals—always lead to inequality.

No matter how hard governments may try, they can’t force people to be the same. This is called reality.

5. “If history could teach us anything, it would be that private property is inextricably linked with civilization.” — Ludwig Von Mises

Without property rights freedom can’t exist. If individuals don’t have control over their property, then the state does. If the state owns your property, the state owns you.

One of the notable achievements of the Left has been to correlate private property with greed.  This often puts defenders of private property on their heels.

It shouldn’t.

Owning property gives people dignity. And people who own property will be far better stewards of that property than any disinterested third party.

All lovers of freedom should be staunch defenders of private property. Without it, a productive and free society is impossible.

6. “The free market is not a system… It is not something that Washington implements. It does not exist in any legislation, law, bill, regulation, or book. It is what you get when people act on their own, entirely without central direction, and with their own property…” — Jeffrey Tucker

Nobody invented capitalism. It’s what free people do naturally—exchange goods and services for their own benefit.

Before there are interventions, regulations, stipulations, and controls–there are humans acting, associating, cooperating, building, and creating. That economic freedom is what we call capitalism.

When people are free to do what they want—within the bounds of the law, of course—they do their best work. Simple—and wonderful—as that.

7. “Under capitalism, man oppresses man. But under socialism, it’s the other way around.” — Russ Roberts

Human beings are flawed creatures. They will make bad choices no matter what kind of economy they’re operating in.

The Left thinks we can avoid the dark side of human nature if we just get rid of capitalism. But all the Left does is replace one flawed actor, the individual, with another flawed, but more powerful actor: government bureaucracy at best and a totalitarian monster at worst.

Bottom line:

If you want to live a productive, fulfilling, and meaningful life the free market is your best chance. Really, it’s your only chance.

I’m David Bahnsen, author of There’s No Free Lunch: 250 Economic Truths, for Prager University.