Understanding the Principles of Economics and How to Apply It

Topics: Policy, Government, Adam Smith Pages: 5 (1652 words) Published: February 14, 2014

Common Sense Economics:

What Everyone Should Know About Wealth and Prosperity

Marcus C Boykin

PPOG 502

January 31, 2014

I am not an economist. I never took a class in economics as an undergrad, nor had any interest to do so. As an undergrad I thought economics should be left to the accountants and business professionals while I focused my attention on policies and politics. When I learned I had to take a graduate level course in economic policy I was for lack of a better word intimidated. My text books all arrived on the same day and my fear mounted as the books were thick with titles suggesting the depth of the material that was as foreign to me as Mandarin Chinese. As I shuffled through the box thinking I might have made a mistake in taking this class I found one small book at the bottom; Common Sense Economics: What Everyone Should Know About Wealth and Prosperity. It should have been entitled Hope, because for me that was what it signaled. I immediately ran upstairs and started to thumbing through the pages praying that this book could calm my nerves and eradicate my fear. I was not disappointed. The first thing I learned that day was that I was not alone in my fear of economics. In fact the book starts out with the fact that many Americans do not understand the principles of economics and how they apply to virtually everything we do. The four authors harmoniously work together to help alleviate the epidemic problem they see as an economic illiterate nation. Alleviating the stress associated with understanding economics, the book reads in a simple and easy to understand format. In four parts, the book introduces the reader to the elements of economics, sources of progress, the role government plays, and practical advice in personal finance. It will teach readers principles that can be applied to not only personal finances but to how economics and policy are intertwined and inseparable. In doing this, the book provides lessons that will create well informed citizens about the competing visions to the role in which government plays in the lives of Americans and the economy as a whole. The book opens with a fact of life that is essential to understanding economics. The fact is that “life is about choices.” Choices are what we are faced with daily and they pass by seemingly without a thought. What is interesting to study in these choices are the underlying pulls and pushes of every decision which can be called the incentive. The book describes incentives as what drives human action and decision making at all levels of society under every system of government. “Economics is about human decision making.” In understanding this fundamental aspect of human nature, the book lays down a principle foundation in understanding how economics work. In a world filled with choices the rest of the book offers how the reader can make the best decisions while offering insights on how governments could adopt better policies to facilitate a vibrant economy. Government plays an integral role to the narrative of the book. The authors strive to educate and inform the reader on policies and promises that are not allows in line with the principles that the authors advocate for. For example, the concepts of free education, free medical care, or free housing are as the authors state “deceptive.” Everything that is consumed whether from the private or public sector requires production and delivery in some form and this is never free. The authors make this point very clear in relation to political promises that use the word free, but they also understand that “politicians have an incentive to conceal the cost of government.” The book as a whole has an underlying critical tone towards government involvement that I as a student of public policy found to be useful. However that is not to say that the authors do not recognize the “powerful force for prosperity”...

Bibliography: Capretta, James C. “Policy Studies.” AEI. http://www.aei.org/policy/ (accessed Jan 25, 2014)
Ferrarini, Tawni H., James D. Gwartney, Dwight R. Lee, and Richard L. Stroup. Common Sense
Economics; What Everyone Should Know About Wealth and Prosperity. New York: University Press, 2010.
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