Do you ever think they are out to get you? If you do, which they is it? Politicians? The media? Democrats? Republicans? Big business? Poor people? Rich people? The government?
Psychenomics is based on the idea that economic literacy affects our psychological health: The less we understand about the economy, the more anxious or depressed or paranoid we can be.
It is a simple idea: If economic literacy, like language literacy, is the key to psychological and personal freedom, then knowing a little bit about economics can improve not only your business and investment health, but also your mental health.
I have listened to countless successful businesspeople, people who run the largest corporations in America, talk about the world. Almost without exception, some topic comes up and he or she says, “Well, I really don’t understand economics.” Or, “That’s probably better left to economists.”
Why? Why would some of the world’s smartest and most successful people say they do not understand economics?
The answer is simple. Economics does not make sense to them. Not because businesspeople cannot understand logical arguments, but because there are too many illogical arguments in economics.
The thing economists have done best is to convince almost everyone that economics is not only extremely difficult, but that many of its theoretical conclusions are “counterintuitive.”
What does it mean to be counterintuitive? It means to contradict conclusions based on reason, knowledge, and facts.
Which is exactly what a lot of economics does. Which is why much of economics does not make sense to a rational and logical businessperson. Which is why I wrote this book.
The truth is that the only parts of economics that are difficult to understand are the parts that are illogical or that are based on unrealistic assumptions. At its core, economics is incredibly simple. As we will see, it is as simple as understanding how water flows into and out of a bathtub.
Freedom is about conquering fear. That is why slave owners prevented slaves from learning to read and write. They knew that literacy leads to asking questions, which leads to knowledge, which overcomes fear, which then leads to a demand for freedom. It is also why dictators are quick to burn books and take control of education. It may also be why it took the leaders of the Christian Church more than 1,500 years to translate The Bible into a language the people could understand.
If you cannot read and write, you are at the mercy of others. You have to trust someone else to tell you what has been written and what you are signing, which means living in fear.
In virtually all cases, language literacy erodes the illegitimate hold that rulers have over individuals. Economic literacy is the same. If you do not have a little knowledge of economics, you can lay awake fearing what others are telling you about the inflation, recession, or depression they claim is descending upon you, likening each new disaster to a plague sprinkled on the undeserving by God Himself.
In the end, economic literacy, like language literacy, is about power. Throughout history, the easiest way for those in power to maintain control has been to keep the people illiterate. It is the same with economics. Because of the importance of the economy in everyone’s life, and because of the fear that can be fostered by predicting economic disruptions, the only way to be free is to understand just a little bit about real—not partisan—economics.
Everyone knows that Abraham Lincoln said, “You can fool all the people some of the time, and some of the people all the time, but you cannot fool all the people all the time.”
Although common wisdom likes to see Lincoln’s quote as a positive statement, because it ends with the idea that politicians cannot fool all the people all the time, if Lincoln is correct, it is not necessary to fool all the people all the time, because those in power can get what they want simply by fooling some of the people all the time or all the people some of the time.
The purpose of non-partisan economics is to explain the real world in a way that makes it difficult to fool anyone anytime.
Of course, while it might help you sleep at night, nonpartisan economics can be more controversial than partisan economics, because economic truth can anger both sides of the political aisle.