HOUSTON — Author Thomas Fellows discusses economics, the theory, and teaching it middle and high schools
Fellows draws on Adam Smith, who is known as the father of economics and author of “An Inquiry into the Nature and Causes of the Wealth of Nations” (1776), it talks about the ‘invisible hand’ being in the market at play, and that it drives the free market in general.
An example would be a child selling lemonade, that lemonade coming from the grocery store, on the side of the road but it begins with the farmer. That farmer grows lemon but needs the nutrients and fertilizer to grow the lemons. So that is where the economics really begins.
The farmer sells the lemon to a wholesaler for maybe $0.10 and that wholesaler may sell it to a supermarket for $0.50 a lemon and to build the lemonade and that person might buy the mix for maybe $2 to $4, then the child ends up selling lemonade for $1 a cup.
According to Fellows Adam Smith once said, it is not from the benevolence of the brewer, the baker, or the butcher, that we expect our dinner, it is in regards to their own self-interest. So when you try to sell something in general, Smith talked about how we are led by an invisible hand and we are better off trying to look out for our own self-interest rather than to look out first for the public good.
Fellows also adds that Adam Smith said any society where the larger part of people are not flourishing or happy is not a good thing. So you’ve got to have that balance. Under the Ronald Reagan administration taxes, in general, were still very progressive because you have to have a progressive tax system to look out for the very poor. Because some people can’t pay taxes because they can’t afford to. Someone once said, “no civilization has ever taxed itself through prosperity.”
Now, if taxes are cut, oftentimes it can create more businesses to produce jobs, which of course, people need jobs to pay their bills. Basic economic theory and a nutshell.
The United States really started on a free enterprise system and that is what makes America different from other countries. That is how you should really look at America. Now, if corporations are not paying their taxes, that is a big problem and we’ve seen that happen with Amazon, for example.
Fellows added, “In terms of lowering the gap between the rich and poor that is something that should be studied. But you know, what I will say is if you implement very radical left policies that are close to communism, it works great on paper but if people are taxed heavily, then they’re not incentivized to work and that can be a big problem overall.