Economics is the study of human behavior in response to limited resources. Much - Our competition allows big losers and big failures.
of it is determined by multiple, natural, instincts. We have already covered a few:
Ambition and its ugly sister Greed (Lessons 4 and 10), Slavery Evasion (Lesson 7),
Cost/benefit Analysis (Lesson 11) and Competitiveness (Lesson 14). These instincts
cannot be extinguished and must be dealt with. However, there is a master instinct
which overrides the others: Adaptation.
Learning occurs in response to positive and negative stimuli (reward and
punishment). Adaptation is a change in behavior that results from learning. All
creatures adapt, either consciously or unconsciously, individually or collectively. All
societies have challenges, and free, capitalist societies get big ones:
- Our rapid economic growth comes with big recessions.
- Our harnessing of ambition can lead to big greed and corruption.
- Our creative ingenuity can lead to creative, ingenious crime.
But free societies are also free to adapt and, as a result, our problems are short- - by bailing out failed banks.
lived. Because we are constantly exposing ourselves to new challenges, we evolve
rapidly, becoming strong and resilient. Adaptation is stunted, and problems are
prolonged by government and through government:
- by bailing out failed auto worker unions.
- by subsidizing inefficient farms, bloated universities and dumb energy ideas.
- by enacting tariffs and other trade barriers.
- by reelecting bad politicians for decades.
- by failing to enforce laws, such as immigration laws, naked short-selling laws for
investors, and tax laws for Democrats.
Our longest recessions have been the ones that the government tried to fix. Our
shortest ones were the ones that were left to the people to fix.