 The series of three courses that are going to cover all the chapters in Lessons for the Young Economist, they're all called The Basics of Economics. The first one is subtitled Action and Exchange. That will cover chapters one through six. The second one is called The Free Market, and that'll cover chapters seven through fourteen. And the third one is Government in the Market, and that will cover chapters fifteen through twenty-three. So I'd love to have a podcast with you about the other courses in the future. In this podcast, it would make sense to talk mostly about the first course that's coming up that is going to cover part one Foundations, which is chapters one through four and part two Capitalism, the Market Economy, the first two chapters of that part, chapters five and six. And so that's going to take the student from just the what we call the Action Axiom, just the just the principle of human action all the way through barter prices and direct exchange. And so let's talk a little bit about the first chapter in part one, Thinking Like an Economist. What do you think is the characteristic way that economists think that people not trained in economics have a harder time thinking in that way? Well, I think first of all, it's it's a certain attitude or a perspective, a way of looking at the world, and that's what an economist brings to the table. And it involves things that, you know, trying to understand people's behavior and social outcomes as the result of intentional decisions by people. And so other mainstream textbooks, introductory textbooks, will try to capture it with phrases like saying people respond to incentives. Another way of thinking like economists is to say that people act on the margin or people make decisions on the margin. There are always opportunity costs. There's no such thing as a free lunch, right? So these are very popular sort of mainstreamy free market ideas that certainly Austrians would endorse the content of those phrases. But what I notice is that the more I work in economics and I recently had a debate with David Friedman on methodology and economics where I was defending the Misesi in position and and so as you mentioned, just going through the text there that we we do explicitly start from the fact of human action and then start deriving economic principles from there. And what's funny is most mainstream economists, that's one stumbling block for them, where they say, yeah, you Austrians have a lot of good insights and we kind of like your business cycle theory, perhaps whatever, but wasn't that a weird obsession that this guy Mises and his followers had about economics is based on the action axiom and, you know, why can't we just be like the physicists and just have our theories and our principles and go test them against the data and that's, you know, we're scientific, right? But actually just think of all those things I just said that even the introductory mainstream textbooks when they talk about what does it mean to think like an economist to say, you know, people respond to incentives. That's not something you go and test. You know, like if I said to you here, I'll give you $20 if you chop off your left arm and you say no, thanks. I didn't just disprove that people respond to incentives. Clearly as an economist say, well, I didn't offer you enough. If I said, there's a million dollars, you know, you might say, well, I'm right-handed. Maybe I will, you know, so you see the point there and things like to say there's no such thing as a free lunch. Again, that doesn't mean that George Stigler went around surveying cafeteria saying, do you guys charge zero price for your lunches? That's a principle that means whenever there's a situation and something looks like it's coming for, you know, at no cost really, there's some trade-off involved. And that's all it means. And so it's not an empirical regularity that economists noticed. It's a it's an attitude. It's a way of saying open your eyes to the full situation. And so that's I mean that every one of those bullet points that you'll see in a mainstream textbook saying, what does it mean to think like an economist? They are all what means to call a priori things that, you know, flow from the fact that, okay, we're going to interpret social activity as being caused by people having goals and trying to achieve them, perhaps, you know, with the wrong expectations, then those standard thinking like an economist principle start popping out. Like that's why there's always an opportunity cost because if people are choosing, that means they're giving up something. And if they're choosing with intention, that means they have preferences and they value outcomes. And so necessarily to choose one and not the other means you're giving up what you could have done instead. So that's what it means for there to always be an opportunity cost coming with a decision. So that's again, that's not something you go test. So it's that's kind of what we're trying to do in this book is to go through things and provide a coherent broad education and what other economists would say, yeah, that's a fantastic free market education, but to sort of ground it in the Austrian perspective because the older I get the more I realize that's why Mises did it that way because that really is the foundation of economics. That reminds me of something that another non-Austrian free market economist said Thomas Sowell would say there's no such thing as solutions. There are only trade-offs or something like that. And and so that that that gets at how Mises really thought of human action, the sciences of human action and economics as the logic of choice and he keeps talking about boiling it down to ultimately it's about someone choosing A and setting aside B and what's beautiful about Austrian economics is that it's very thorough going in in applying that truth and it just starts with that fundamental truth and from that it builds up the idea of preference rankings and then from preference rankings you can construct supply and demand schedules and from supply and demand schedules you can construct price theory and and from and that's what that part is what's going to be covered in this course and then going from on from that from Prices and taking price theory and constructing a theory of profit and loss and about the market and in general that's what future courses will cover and It's just really remarkable that how how well you bring that across in this book. Well, thanks. And yeah, just to elaborate on that. It's it really is amazing as you say that that Mises You know, he realized no just from that insight that humans act I mean in one sense when I was younger I didn't understand why he titled his book human action like I said, why don't you call it, you know Principles of economic or economic laws or something but now of course I get why he did that and all these things these issues in which Austrians tend to have battles with other economists like you alluded to one this issue about Preferences being ordinal and and utility ultimately being an ordinal thing not cardinal and that's something that Austrians have spilled a lot of ink over But again, that's because the Austrians are saying well No, if you're grounding economic science on the fact that people choose and you're looking at their action Well, then the only thing you can ever demonstrate it with action is that something is better than another you can't you know If I pick a over B, we can't say oh, he valued a 16% more or a gave him 16% more utils than B All you know is a was more valuable a was higher on his preference ranking than B was and So that's where the ordinal nature of preferences come in and then like you say it's That's surprisingly powerful. There's a lot you can explain everything in a market economy with that foundation It's not that oh, yeah, you got to make all these other weird assumptions Just to have something tractable to be able to build something like the mainstream economists might say no and even in this Lessons for the economists like you alluded to we go through and I have a simple little story about kids who after Halloween have candy that they're trading and I just show how Market exchange ratios between butterfingers and Snickers bars or whatever candy bars I used would emerge and all we have to deal with are the ordinal Preference rankings of the students for the different types of candy and then you can show this is how you know Put these kids together in a room and they start bargaining And these are the ways that prices would emerge and we don't need to assume Then he kind of you know cardinal utility functions things like that that what Mises says Economics should be based on that really is all you need to build up modern subjective is price theory and What's really great about that not only because it's true, but it's also I think very easy to teach that especially compared to the sort of non systematic non building up from Foundations up towards more complex a phenomenon that that that's something that Kids are logical that that kids you don't have to teach logic. That's just the way that the human brain works and and it used to be that every schoolboy and schoolgirl learned Euclid learned geometry starting from first axioms and building up to more complex Laws about geometry a lot of Austrians have talked about Austrian economics Or or the Austrian view of economics as being much more akin to geometry than akin to physical sciences and so in terms of teaching students about this system sort of like this Intricate architecture of logic starting from the principle principles and building systematically up from that it seems that that especially online education where it's time shifted where the students can Go back to the video whenever they want and really spend as much time rewatching it as they need to and re-reading and then and then only going on to the next video when they're actually ready for it that that that you can really Learn economics thoroughly that way the way that kids used to learn geometry all the time Yeah, and it's a great analogy and that even makes it into the lessons for the economist where I Use the analogy with the Pythagorean theorem to explain. This is what we're doing With economics in this book and you know, of course based on the Massessian approach and It's just funny a lot of the objections people bring, you know, why do we make that analogy all the time? It's because the objections of the critics who say things like well You kidding you guys don't come up with falsifiable laws of economics that you go and look at the data You run experiments to test were you crazy that that's not scientific. You're just you know in using mere Tautologies, you're just walking around in a circle in your head with your own definitions You're not learning anything about the real world and so you say, okay, well, let's apply everything you just said to geometry That you know when when you show someone the proof of the Pythagorean theorem that is theirs forever It's not that they could wake up tomorrow and realize oh my gosh Actually that that was wrong because someone shows me a triangle and I measure it and oh geez or you don't have to Prove it by going out and measuring a thousand triangles and hopefully 999 of them come reasonably close to what this the theory says And so but yet does that mean therefore that you clit in geometry is just a mere Tautology and we're not learning anything about objective reality by going through it and obviously no, that's not true That's why we make kids learn that sort of they used to make kids learn that so that's why it's that's considered You know you clits considered a genius and one of the most important contributors to modern Civilization is because we know that that stuff even though in a sense you could Absorb you clitting geometry just locked in the closet if you somehow had a method of you know going through the proofs in your head Yet that helps us navigate the real world And so that's what economics is that the stuff we teach in this book and the stuff that you know Mises taught in his books It's you don't have to go out and test it empirically to see wait a minute as this guy makes sense It's all a self-contained logical system just flowing from the idea that humans act But then once you've mastered those things and they're not obvious too just like the Pythagorean theorem is not obvious And when you if I tell you the definition of a triangle and what it means for things to form an angle It doesn't just pop out Oh clearly this you know square of the hypotenuse equals the sum of the square of the other two sides in the right triangle That doesn't just pop out Somebody if somebody walked you through the steps of the proof of the Pythagorean theorem It it wouldn't be valid for someone to then say why do you keep you repeating yourself right exactly? Yeah, so you're learning new things about reality by being the same thing with economics that you learn some and that's Hopefully if someone who takes these courses Walks away knowing more about the real world Even though the way I communicate that was not to say trust me a bunch of economists have run experiments Or we've done statistical analyses and we're pretty sure this is the way the world is here you go We just saved you a bunch of work. That's not the way it works. We go through demonstration like you say even a child Can follow the proof and then boom if they get if the kid understands what I went through and understands each step of the argument Then that's his or hers forever That you know now they can go and view the world through that lens And doesn't that inspire hope? I mean isn't it? revolutionary the fact that just as in when when we had much better Education system that school every schoolboy and schoolgirl could learn Euclid We could could learn would learn the elements of Euclid and and so the idea that if it was presented in a pedagogically efficient way a very you know, educationally effective way that every schoolboy and schoolgirl now could understand the basics the basic logic of Of a market economy And when I say schoolboy and schoolgirl, I don't mean like kindergarteners obviously I mean high schoolers and middle schoolers the audience the audience of the book although adults are couldn't get a lot out of this too but just the idea that that you know conceivably a whole generation of young people could learn learn these principles and and how much the world would be different if they did and how much the world would be different if if You know so many young people just grew up learning how a market economy works and the virtues of market economy and and the Folly of socialism and of interventionism Yeah, it is inspiring and it as I'm certainly not the first person to say this just the possibilities of the internet online education just how now we don't need to take over the Harvard and so forth and all the Government-run schools and everything like we can make sure the proper Education certain key ideas are getting out and people can get that on their own time because now it's so cheap and so efficient to Transmit it in terms of people's schedules that they can absorb that pretty quickly And it's our job as educators to figure out different ways of how can we make this more understandable? How can we boil this down and get the essential message across and as that happens like you say It's gonna be harder For the government to enact all sorts of silly things. I mean just to give you an example with the Affordable Care Act what's called Obamacare? I mean I just did an article on that and I was just gonna walk people through The logic of it. Well, you know, gee if they're gonna insist that insurers can't turn away people with pre-existing conditions Then all sorts of things have to follow They have to have minimum standards on the type of policy because otherwise the insurers would say okay Yeah, well, you know, you got brain cancer Sure, we'll put you on our roles and we'll cap it at $100 a year that will pay for medical expenses near premiums two million dollars Sure, we can comply. So, you know once you start down that path Trying to tinker with the market outcome Then the government necessarily is gonna have to just do more and more and more and then we won't be surprised Five years from now when that system doesn't work as it won't and then everyone's gonna say well gee clearly the free market doesn't work That's why we need to have a single-payer federal system and healthcare. So I'm saying things like that How do they get away with that? It's because the general public just it's not automatic for them Like it would take an economist to walk them through that and then they might say oh, yeah I didn't think about that and so that's it and it's in and off the public if they just want to embrace socialism Okay, but the thing is they don't want to they didn't realize that this is gonna be the outcome of what's been called Obamacare They kind of just thought oh, yeah, I'll get you know, thank goodness He just tickets these greedy insurance companies or they might just say well, you know, that's that's a complex subject I don't really have an opinion on it one way or the other. So the more people who have just basic Economic principles under their belt they would understand. Hey, there's no such thing as a free lunch You can't possibly ensure millions of people give them more medical care and then not expect Spending on health insurance or health care to go up and so things like that and that gets at one of your sub Chapters within the first chapter why study economics and I'm sure a lot of parents listening Want to know how how can they motivate their kids to be interested in studying this in the first place? Yeah, well, I mean obviously it's in an interventionist economy such as we live in today It's important because the government Rams through all sorts of things. They're gonna have horrible consequences because the masses are generally ignorant about these topics And so that's you know, the the primary reason in today's environment that people need to learn this stuff is so that they first of all Don't fool for the politicians empty promises, but also then they can go out and Tell their friends and co-workers and so forth that hey, did you ever think about this and then oh gee? No, I never thought but you know, we need more people doing that sort of thing But also just beyond the pragmatic. I mean, it's just inherently a beautiful Topic like to understand how can it be that people acting in their own? Interest which doesn't necessarily mean that they're selfish it just means acting according to their own purposes and there's all sorts of information and Things out there that no one mind could possibly control and yet there's a way in which they all come together in the institution of private property and Prices help them coordinate with each other and you achieve What if it were planned would be a magnificent unbelievable outcome? And yet we just take it for granted because that's how well the market economy normally works when the government doesn't mess with it And so it's I mean just like you know someone why would you study how the human body works? Oh gee if there's an infection, how does the body fix itself? And that's fascinating just even if you're not planning on going into medicine It's just interesting to know that and the same kind of thing here that how is it that a market economy works? And once you realize what it does every day, it's it's amazing