What is the central idea of classical economics?

Answer 1

The problem is not understanding a few basic ideas, as explained herein.

Sam's Theory of Economics

By

Samuel M. Chacon

Children have fun playing with marbles or money. Playing marbles is a game. Playing with money is economics. In both, rules determine who wins. The single most important thing you need to know is this: Have Fun, whether playing a game or living together!

It is important to set rules to play games or control finances.

When playing marbles, a rule could be "for fair" or "for keeps". When playing for fair, marbles return to the owner. When playing for keeps, the winner keeps the marbles.

An example of a game of marbles is 2 boys playing (Child No. 1 and Child No. 2). Child No. 1 is rich and has a lot of marbles. He gets two marbles and asks poor Child No. 2 to play with him and lends him a marble.

Child No. 1 draws a circle about 2 feet wide in the ground and tells Child No. 2 to put his marble in the center of the circle. Child No. 1 shoots to knock the marble out of the circle. If he knocked the marble out of the circle, he wins. If the rule is "for fair", the game continues by lending another marble. If the rule is "for keeps," the fun stops.

If the rule is "for keeps," the loser can borrow marbles to keep playing.

In the game of economics, people who are not wealthy borrow money from those who are.

An example of a game of economics is three people playing: Person No. 1, Person No. 2, and Person No. 3. Each one has one dollar. Person No. 1 sells food for $1; No. 2 sells clothes for $1 and No. 3 sells medicines for $1.

Persons No. 2 and 3 buy groceries and each pays $1. They are broke and have to wait for Person No. 1 to buy clothes and medicine to have money. They all have to buy one item from the each other at the same time to have money all the time.

This game does not work. The people decided to change the dollar to 100 Cents, and reduce the cost of each item to 1 cent. This corrected the money problem.

If each family had one hundred children and they gave each child 1 cent, it will not work because they would be in the same position as when the three people had one dollar each. Theoretically, this will continue as population grows.

When the population grew, the people selected ten of the smartest ones as money managers and one of the ten as their leader. The other nine would talk to the people and get ideas to create jobs and manage money. The leader would collect information, and the group would choose the best ideas. Because the ten representatives lived in a White House, the people referred to them as "The White House".

In this theoretical game, gold is useless. The White House decided to print enough money so that each person would have $100. The total money needed for 300 people is $30,000.

The White House noticed that people bought more food than clothes and medicines. All the money was going to those who sold food. In ten years, they would have all the money.

The White House decided to tax the people who were making all the money, and distribute the tax collected to the people. They would make the money game a "for fair" game. They established a Census Bureau to keep track of how many people there were and how much money each person had. The rich people did not want to pay taxes.

(Note: In 1934, Huey Pierce Long Jr. created the "Share Our Wealth" program to play economics by the "for fair" rule, but rich people did not like it. Long Jr. was the 40th Governor of Louisiana from 1928 to 1932 and a U. S. Senator from 1932 to 1935.)

The White House then told the rich people that, if they did not want to pay taxes, they would have to create different kinds of businesses and hire workers, so they could have money. Workers had to earn $125: $100 for living expenses, $5 for savings, and $20 for taxes to pay members of the White House and the Census Bureau, medical expenses for everyone, and help those who were too old or sick to work.

If rich people did not generate employment, the White House would tax them and limit the amount of money they could have to $1,000.

The White House also concluded that if each of the children has 100 children, and those children have 100 children, they would always be in a situation like three people having one dollar.

The White House had to figure out what to do when the population grew. More money had to be printed even if rich people created jobs.

The rich people suggested The White House borrow money from them instead of printing money. After thinking about it, they realized that the rich people would get richer if The White House borrowed money from them, and they would eventually have all the money.

People with money had to establish businesses to produce goods for $20 dollars and sell them for $22. Businesses would always be making money and eventually have all the money. It became clear that the money game will not work whether played by the "for fair" or "for keeps" rule.

The White House decided to control taxes and businesses, and print money as the population grew, so that each person would always have $100.

The White House had to figure out how to keep track of population growth and the amount of money to print as the population grew.

The Census Bureau would keep a count of population growth and economic status. The Bureau would know how many rich people were creating jobs. It would count the number of people working and the number of people unable to work. Rich people creating jobs would not pay taxes, but those not creating jobs would be taxed and limit their cash to $1000.

It would be up to the people to audit The White House and Census Bureau to make sure members of the House and Bureau were honest.

A census would be taken every ten years to make sure the information collected was correct and find out who needed help. It would be a game of honesty, cooperation, and finding ways to make it an economic game of the people, by the people, and for the people.

Answer 2

the idea that free markets regulate themselves