This is the first of four episodes that build economics from the ground up, an economics course in four weeks, because the argument America is having about the debt, about inflation, about affordability, is being had by people who were mostly never taught how an economy works.
Economist Lawrence Reed starts with a definition: economics is the study of human action in a world of limited resources and unlimited wants. Then he goes to Adam Smith, 1776, and The Wealth of Nations, and the idea Smith destroyed, which is mercantilism, the belief that the world's wealth is fixed and the only question is how to divide it up. Smith said you can bake a bigger pie. Almost everything the other side is selling in 2026 depends on you not believing that.
Jenny Beth Martin brings it to today. The national debt has passed 40 trillion dollars and is now larger than everything America produces in a year. Washington is spending two trillion dollars more this year than it takes in. Roughly a trillion of the seven trillion dollar federal budget goes to nothing but interest, and that is scheduled to rise and crowd out Social Security, Medicare, Medicaid and defense. On top of that, Medicare for All is estimated at four trillion dollars a year.
Lawrence W. Reed is president emeritus of the Foundation for Economic Education. He ran think tanks in Michigan and Idaho, taught economics at the university level for seven years, and is the author of nine books.
In this episode:
Adam Smith, mercantilism, and the myth of the fixed pie
A debt bigger than everything the country produces, and what a trillion a year in interest costs you
The invisible hand of the marketplace against the iron fist of government, and the lockdowns as the proof
Why value is subjective: the mud pie, the apple pie, and the sixth ice cream cone
I, Pencil, and why nobody on earth can make one alone
What happened when the Soviet Union abolished prices
Competition, monopoly, and the businesses that ask Washington to block the little guy
Free trade, tariffs, Bastiat's candlemakers, and the Austrian School
Tell your senators and your representative what you want done about federal spending. The Capitol switchboard is 202-224-3121. Watch this and every episode at jennybethshow.com.
Learn more about the organization behind the show at teapartypatriots.org.
00:00 — Cold open: forty trillion in debt, and an economics course in four weeks
01:02 — Lawrence Reed joins, and the four-part plan
02:38 — Three think tanks and seven years teaching economics
03:27 — A definition: human action, limited resources, unlimited wants
06:55 — Adam Smith, 1776, and the first comprehensive economics book
09:36 — Mercantilism and the myth that wealth is fixed
11:06 — Forty trillion dollars, and a debt bigger than what we produce
12:56 — A trillion a year in interest, and what it crowds out
15:10 — Productive debt, and a balanced budget amendment nobody has proposed
17:21 — Medicare for All at four trillion a year
18:32 — Gross domestic product, explained
21:15 — The invisible hand against the iron fist
23:23 — The lockdowns as a live experiment in central planning
29:24 — All action is individual, and society never ate breakfast
34:21 — Government grocery stores in New York
36:40 — Trade-offs, subjective value, and the mud pie
40:14 — I, Pencil: nobody on earth can make one alone
43:26 — Prices carry information, and the Soviets threw it away
46:26 — Supply, demand, and the most remarkable force in your life
48:03 — High prices are their own cure
50:41 — The dollar is worth less than a nickel was in 1913
52:53 — Medicaid, work requirements, and Nick Shirley on fraud
56:04 — It is not only the politicians
58:52 — Competition is the striving for excellence
01:03:11 — The proper role of government: night watchman and referee
01:05:33 — Free trade, the division of labor, and opportunity cost
01:10:26 — Protectionism, tariffs, and a jury still out
01:16:49 — Bastiat's candlemakers petition the king to block out the sun
01:18:44 — Microeconomics and macroeconomics
01:20:49 — The Austrian School: Menger, Mises and Hayek
01:25:15 — What comes next in the series
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