Economics 101

Economics for Beginners: Five Articles to Get You Started

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For in him all things were created: things in heaven and on earth, visible and invisible, whether thrones or powers or rulers or authorities; all things have been created through him and for him. He is before all things, and in him all things hold together.  

                                      — Colossians 1:16-17

IFWE’s mission is to build a framework of faith, work, and economics for the purpose of living out whole-life stewardship. Sound economics is grounded in biblical truth and helps each of us to be better stewards.

Many of our readers are new to economics, and we’re continually working to define this area of study to make it real and concrete for their everyday lives. Economics is the science of human action. Humans are intentional and purposeful. This is how God created us. In Genesis, he gave us the cultural mandate, with the purpose and intent of developing his creation. Our actions, while intentional, are not perfect or always well-calculated, but they are aimed at achieving specific ends. These ends are only known and valued by the individual doing the choosing.

If you are interested in learning more about economics but feel short on time, below are five of my favorite beginner articles. They are short, easy to read, and will help broaden your understanding of the importance of economic thinking as we apply it to Christian stewardship.

 1. “I, Pencil” by Leonard E. Read

This timeless article is a superb introduction to the market process. Markets work as a coordinating mechanism that brings together millions of dispersed people to cooperate with one another. This market process encourages self-interested parties to serve each other and the common good by providing for the needs of the consumer.

This short essay is told from the point of view of a pencil. The seemingly simple pencil is deceptively complex and not one person in all of creation knows how to make one. IFWE produced a video, I Smartphone, which retells the story in a modern context through the point of view of a cell phone.

Read the article here.

2. “Where Do Prices Come From?” by Russ Roberts

Economist Russ Roberts provides a primer on how prices emerge and dispels common myths around them. Prices are formed from the interaction of both the seller and the buyer, and they help serve as signaling devices about the relative scarcity of resources.

We live in a world where scarcity is one of our biggest constraints. Prices help us economize on those scarce resources and bring together buyers and sellers so that vital goods and services can be produced.

Read the article here.

 3. “What is Seen and What is Not Seen” by Frederic Bastiat

Frederic Bastiat was a 19th-century political economist and member of the French Assembly. Known for his winsome and witty writing, his essays have become timeless. This essay, also known as the Parable of the Broken Window, tells the important economic lesson of understanding opportunity cost and scarcity.

Sadly, the lesson of the parable has not been learned, particularly in the public policy discussions we hear today. Bastiat’s parable is a powerful reminder for Christians that scarcity abounds and we must understand the costs of the choices we make–and the opportunities we forgo–when we make certain choices.

Read the article here.

 4. “They Clapped: Can Price Gouging Laws Prohibit Scarcity?” by Michael Munger

Economist Michael Munger provides a powerful lesson in what happens when we don’t understand scarcity, incentives, and the function of prices. The result is that we make decisions and act in ways that harm us and others.

We can’t pass laws that eliminate scarcity. Living in a fallen world means living in a world with limited and scarce resources. As such, we need incentives that entice people to serve one another. When prices are able to adjust to changing levels of scarcity, the market is effective at sending strong signals to buyers and sellers, which make them better stewards of those scarce resources.

Read the article here.

5. “The Road to Serfdom: The Reader’s Digest Condensed Version” by F. A. Hayek

The Road to Serfdom is one of the most compelling and profound books of the twentieth century. Hayek was vigilant in his intellectual battle against central planning and socialism. Reader’s Digest ran a condensed version of the book in 1945. It has sold over 2 million copies and remains a best seller.

This book details the loss of freedom that occurs on the road to tyranny, and should serve as a warning signal to Christians about the imperative of fighting for freedom.

Read the article here.

I hope these articles can provide an introduction to the economic way of thinking. Economics helps us to be better decision-makers. It is a tool that helps us understand costs in a robust manner and helps us foresee potential unintended consequences. Economics gives us a view of the long-run, helping us make better choices today with God-given resources.

Editor’s Note: On “Flashback Friday,” we take a look at some of IFWE’s popular posts that are worth revisiting. Today’s post was previously published on Jun. 18, 2013. Want to learn more about economics? Check out IFWE’s homeschool economics curriculum, Biblical Foundations for the Economic Way of Thinking.

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