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Well economics is a very under appreciated way of looking at the problems that face poor people, and face human beings in general operating in society. It’s really just a set of common sense principals that have gotten refined over time through a lot of trial and error, a lot of thinking by a lot of people over the last two centuries since Adam Smith wrote “The Wealth of Nations”. About very simple concepts like how we can both mutually benefit if we trade with each other. You know, if I give you something that you want more in return for something that I want more, we both benefit. And there are positive gains from that trade. That’s a very simple insight, but that has been an enormous engine for human progress, a simple insight like that coming out of economics. Or the whole idea of the invisible hand. A complex economy that creates riches is not designed by anyone. There’s nobody who designed it. It just arises spontaneously through the free market, and the invisible hand through the decentralized actions of lots of just self-seeking, selfish individuals who are each just pursuing their own interests. That’s how people achieve wealth. And those kinds of simple insights which have been so neglected throughout the history of fighting world poverty . . . because we’re always . . . The approach in fighting world poverty is, “Oh, we have to come up with some government expert plan. We have to get someone to devise the expert plan that will lift poor people out of poverty.” Well that’s not what economics says. Economics says there’s this genius of the invisible hand that makes wealth happen without anyone intending it through individuals operating in the free market, trading with each other specializing in what their good at. And they create wealth, and the wealth spreads, and people are lifted out of poverty.

Recorded On: 7/6/07


What is economics?

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