Just about 32 years ago I graduated from Saint Vincent College (SVC) in Latrobe, PA. I’d transferred from William & Mary—much to my father’s chagrin. What neither my dad nor I realized at the time was that I would receive a very valuable gift in Latrobe—a Bachelor of Science in Economics with a heap of mathematics and statistics background to boot. Now, don’t get me wrong; I can’t even help my children with their high school math homework. But what I did gain was an understanding of how business, government and the world works. Oddly enough, someone who built a marketing company benefited greatly from a solid understanding of economics.
Econ is, at its core, the study of why humans do what they do, with the underlying assumption that human beings (of sound mind) act rationally. Marketing is about incentivizing people to act rationally in order to solve problems, drive thought leadership, and build awareness in a busy marketplace. Understanding the basics of supply and demand are critical to understanding how business, government, and organizations work (or why they do not).
Unfortunately, what passes as an economics degree at many prestigious universities is radically different from what I received and what I know students still gain at SVC. What passes for economics is really political theory—leftist political theory. The problem is that much of it is emotional, theoretical content instead of analytic truth, doesn’t make sense, and flies in the face of human nature.
I met Art Laffer at Saint Vincent in 1986; It was an honor. He shared information on his “Laffer Curve” which simply states that if you raise taxes to a certain point, you’ll actually collect less because the people you are trying to punish find ways to avoid the additional burden. Who pays? Well, everyone, especially those at risk during economic downturns. Often what sounds good, hurts the most vulnerable and doesn’t achieve the objective.
It’s been my experience that everything worth having takes tremendous effort. Rigor, analytic validation, and research are the paths to truth. Truth takes time, but in the end, truth matters. Our children and our children’s children need to understand that what doesn’t harness human nature is likely to fail. Economic systems that rely on government to redistribute wealth often kill the very passion and drive that a free economy offers. It removes hope for handouts.
Capitalism works because it functions in reality. In the world in which we live, that matters more than ever.