Simple Economics

Today’s post comes from an email I received recently. Perhaps you saw the email also. When I checked to see if anyone claimed credit for authoring it, I discovered the author was unknown, but I also found that major fact-checking websites disputed its authenticity. I don’t really care whether it’s a true story or not. It cleverly illustrates its point either way.

An economics professor at a local college made a statement that he had never failed a single student before, but had recently failed an entire class. That class had insisted that Obama’s socialism worked and that no one would be poor and no one would be rich, a great equalizer.
The professor then said, “OK, we will have an experiment in this class on Obama’s plan. All grades will be averaged and everyone will receive the same grade so no one will fail and no one will receive an A . . . (substituting grades for dollars – something closer to home and more readily understood by all).”

After the first test, the grades were averaged and everyone got a B. The students who studied hard were upset and the students who studied little were happy. As the second test rolled around, the students who studied little had studied even less and the ones who studied hard decided they wanted a free ride too so they studied little.
The second test average was a D! No one was happy. When the 3rd test rolled around, the average was an F.
As the tests proceeded, the scores never increased as bickering, blame and name-calling all resulted in hard feelings and no one would study for the benefit of anyone else.
To their great surprise, ALL FAILED and the professor told them that socialism would also ultimately fail because when the reward is great, the effort to succeed is great, but when government takes all the reward away, no one will try or want to succeed. Could not be any simpler than that.
These are possibly the 5 best sentences you’ll ever read and all applicable to this experiment:
1. You cannot legislate the poor into prosperity by legislating the wealthy out of prosperity.
2. What one person receives without working for, another person must work for without receiving.
3. The government cannot give to anybody anything that the government does not first take from somebody else.
4. You cannot multiply wealth by dividing it!
5. When half of the people get the idea that they do not have to work because the other half is going to take care of them, and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for, that is the beginning of the end of any nation.

 

clip_image003David N. Walker is a Christian father and grandfather, a grounded pilot and a near-scratch golfer who had to give up the game because of shoulder problems. A graduate of Duke University, he spent 42 years as a health insurance agent. Most of that career was spent in Texas, but for a few years he traveled many other states. He started writing about 20 years ago, and has six unpublished novels to use as primers on how NOT to write fiction. Since his retirement from insurance a few years ago, he has devoted his time to helping Kristen Lamb start Warrior Writers’ Boot Camp and trying to learn to write a successful novel himself.

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About David N. Walker

David N. Walker is a Christian husband, father and grandfather, a grounded pilot and a near-scratch golfer who had to give up the game because of shoulder problems. A graduate of Duke University, he spent 42 years in the health insurance industry, during which time he traveled much of the United States. He started writing about 20 years ago and has been a member and leader in several writers' groups. Christianity 101: The Simplified Christian Life, the devotional Heaven Sent and the novella series, Fancy, are now available in paperback and in Kindle and Nook formats, as well as through Smashwords and Kobo. See information about both of these by clicking "Books" above.
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15 Responses to Simple Economics

  1. Marcia says:

    I did get this email, too. I felt it was a perfect to explain this concept. I linked to it on Facebook and tweeted. Will do again from here. Thanks David.

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  2. Wow. I am blown away. I’ve never seen the idea of capitalism vs. socialism put so succinctly. Thank you for such valuable information!

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  3. Jim, while your comment doesn’t strictly fit into economics, it is certainly germane to the classroom situation used here to demonstrate economics. Thanks for your observation.

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  4. hawleywood40 says:

    I agree with a lot of this, question a little, and struggle every day with my own political views. One thing I so wish we could change is how little those who choose and succeed at various “helping professions” are sometimes compensated. It is a shame to me that we live in a society where those who choose work that keeps much of our communities intact are often the ones who struggle hardest to pay the bills – sometimes even harder than those who do have that sense of entitlement and choose not to work at all. But I certainly don’t know how to change that : ).

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  5. Donna Newton says:

    This is a great post. A similar thing happens at my sons school (which I DO NOT agree with). To deal with the naughty children, the head teacher ‘bribes’ them with extra playtime if they are good. However, the children which are good all of the time get nothing. Needless to say, the good kids start to play up and the naughty kids become naughtier.

    At my daughters school, it is better. The naughty kids get punished. The good kids get treats. So far my daughter is being taken to the cinema for 100% attendance, and is in a prize draw to win an i-pod, bike, and lap-top for hard work.

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  6. Intesting. Whether it’s true or not I think it parallels what nature has evolved. I don’t think nature is “fair” (by human standards), nature allows competition to decide the outcome and animals learn to become better in order to win. What schools and parents need to do is provide the support to help their kids compete to the best of their abilities.

    Strange thing is that plants evolve through competition as well! Weird.

    Cheers!

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    • You’re right, Nigel. If fair means egality, then nature is indeed unfair. However, if fairness means rewarding success and punishing lack of success, then nature is imminently fair.

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  7. Renee, you’ve probably read enough of my blogs to know that I’m all into helping people. I just don’t believe in doing it by dragging others down or getting the government involved to force it on everybody.

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  8. Marji Laine says:

    Cool post, David. I think many people have grown into entitlement issues. At some point, (and maybe already) this attitude will come back to haunt the US.

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    • Thanks, Marji. I’m afraid you’ve hit a nail on the head with the “already.”

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      • Jim Meyer says:

        I have an observation that is not exactly on point with the economics, but perhaps relevant to the discussion of attitudes and trends in attitudes over time.

        I occasionally teach an evening business class at a local university. Normally, an evening class would be composed mostly of non-traditional students (working adults). However, since my class is held on the main campus of the university, I get a mix of college-age students and working adults.

        It is amazing to me how entitled the college-aged students feel to receive good grades for minimal effort. In general, the working adults work much harder and make no excuses for their performance. The college age students often want very good grades in return for very little effort and can be quite startled and offended by the expectation that the must earn a good grade. My sample size is not large, but the behavior that I observe is quite striking. This is particularly interesting to me because these are all business students and ideas such as excellence, competition, success, and failure are not foreign to the curriculum.

        Trend or happenstance?

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  9. I’m not sure you can draw broad political generalizations about what might be a hypothetical classroom situation; I have taught classes where I discarded grades and the students continued to work very hard. Harder than they might have with grades. They kept expecting there was sime trick. I have also taught classes where I have graded very carefully and mindfully and I’ve still lost over 50% of the class. I’m not about dragging down the wealthy — fiscally, I’m definite moderate, but I do think we have a responsibility to try to raise up those who are not making it in our system. If we don’t, they just become our problem later.

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