David is a software engineer working at a bitcoin startup with an efficiency obsession. He’s built voice-activated mindstorm robots to automate virtually every home task. His bedroom looks like the opening sequence in Pee Wee’s Big Adventure. As he leaves each morning, he gives three ritual taps to an engraved plaque which reads “PTF? GTD!” Translation: “The Path to Fun? Get Things Done!”

Peter, a vocal locavore, works at home selling organic produce from their backyard semi-urban garden. “If you only sell and never buy, in a bed of cash you’ll happily die” is Peter’s creepy bumper sticker motto on wealth. Technically, it’s a sticker on his old bike, because Peter really does try to live by this mercantile mantra. Peter happily toils away 80 hours a week keeping his little garden growing and selling its fruits through the Austin CSA.

Tonight is a big night.

Tim Harris, productivity guru and author of acclaimed book The 1 Hour Work Day is coming over for David and Peter’s traditional Saturday dinner party. David met Tim, his hero, at a work event and the two, of course, hit it off. Typically, the dinner is made entirely from Peter’s garden; but tonight, David wants to lay out an extra special spread. Peter’s produce is great, but the variety is limited by the size of the garden, the types of produce that will grow in Austin’s climate, and Peter’s skill as a young farmer.

David snaps awake Saturday morning from the sound of Peter’s garden rooster crowing. “Alexa, it’s coffee time!” he shouts, triggering his API-powered LEGO contraption to come to life. The exact amount of fresh beans needed for one 24 oz serving is released into a grinder, which then dumps the perfectly ground, medium roast into a custom french press, mixing with hot water piped from a push-button hot/cold water filter. The coffee steeps then presses as David finishes getting dressed, and is poured into his Klean Kanteen just as he’s ready to leave for Whole Foods.

Heading for the door, David is stopped by a still-groggy Peter, wearing his homemade robe and nursing some homemade “Herba Mate” (Yerba only grows south of the border): “off you go to steal my job and impoverish our house…”

“What?!?” David replies.

Peter continues, “Look man, I’m slaving away to grow our own food. When you buy it from the grocery store, it’s not fair. I can’t compete with their prices! Besides, all you’re doing is making that company rich, giving them all of your money when you could be keeping it at home like I do.”

David shoots back: “But the whole point of me working to earn money is so that I can spend it on the things I want. I can’t eat money. But those Mexican avocados? Yum. Dinner is at 5. To be continued, okay?”

“Fine…traitor,” Peter mutters, only half in jest.

A few hours later, David and Peter are prepping dinner. While Peter roasts tomatoes for a homemade sauce, David is whipping up some guacamole.

“About the whole ‘traitor’ thing earlier…” Peter starts.

David cuts him off: “No problem. I get it. I see how hard you work in that garden.”

“It’s not just about my job. I’m just trying to protect our whole community, you know? Maybe it’s not efficient in that Harvard MBA kinda way, but being self-sufficient means we don’t have to rely on other states or other countries to provide for us. We get to keep our money in the community.”

Before David can reply, the doorbell rings. It’s Tim Harris and a few other guests.

As the group sits around the table, Peter serves up the cavatelli. “Wait ‘til you try his cavis, Tim. They’re out of this world!” says a guest. Peter beams. “I rolled them this morning. Sauce?” Tim nods as Peter ladles a full cup of sauce onto his plate. He digs in and is not disappointed.

“So Tim, perhaps you can help us settle a little debate Peter and I were having earlier,” David begins. “Peter believes that the path to wealth is being self-sufficient: doing as much yourself as possible; selling your surplus and keeping the proceeds.”

“You buy, you die!” Peter clarifies.

“I, on the other hand, love all variety of options you get at the store. I can get virtually any product, regardless of the season, at an affordable price. If I had to grow all of this food, we wouldn’t have half of what we’re eating tonight and I wouldn’t have the time to be a software engineer either. The whole point of having a job is so I can buy the things I want. And trust me, I’m a much better programmer than farmer. These thumbs were meant for typing.”

Tim takes a moment to finish his pasta. “The sauce is amazing, Peter. I can see why you love what you do.” Peter nods in thanks. “But, is it really fair to expect David to give up his dreams so that you can pursue yours?”

Peter’s smile recedes as he mulls that over.

“I just feel like some things need to be protected.”

Peter continues: “Some jobs are too important. Like growing food, or producing steel. If everyone went to the grocery store and bought imported food, there’d be no farmers left. Where would that leave us?”

“Rich!” Tim replies. “If you go back in history, most people worked in agriculture—and so did their kids, from an early age. In fact, one of the main reasons people had large families was to have more help on the family farm. And despite that, many families struggled to have enough food to eat. Farmers were one bad season away from bankruptcy, or even starvation. Self sufficiency doesn’t make you strong. It makes you vulnerable.”

“But that’s not true today. There’s plenty of food!” One of the guests observes.

“Right, that’s because we outsourced food production,” Tim explains. “Less than 2% of Americans work in agriculture today—mostly due to tractors, combines and automation—but also due to international trade. Virtually every American ‘outsources’ their food to the grocery store. We all run a trade deficit with the supermarket. And as a result, each of us is freed to pursue other things, like software engineering, or teaching, or medicine, or you name it.”

David adds: “I make much more money as a software developer than I ever could trying to grow my own food.”

Peter is incensed. “But I suck at math. Always have. But I love to farm. Am I supposed to sacrifice my love to the god of global trade?”

Tim turns to Peter and asks, “are you making a living?”

“Well, yes.”

“And how much do you charge for these tomatoes at the farmer’s market?”

“About $5 per pound. But that’s because they’re heirloom!” Peter says defensively.

“And people buy them, right? Because they’re delicious.” Tim says warmly. “And because your customers, most of whom don’t farm, have the extra money to spend. They have that money precisely because, like David, they’re working in jobs where they are more productive, which means there’s more of everything else to go around.”

“Not everyone has a green thumb.”

Tim goes on: “Some thumbs are meant for wielding a hammer. Some a paintbrush. Some a scalpel. And some thumbs, like David’s, are meant for the spacebar. Each of us has unique skills and capabilities. The only way we get to explore them and expand the endless possibilities of our own potential, and the goods and services we all have access to, is to outsource what we’re not good at doing so that we have the time and energy to find what we’re great at. And clearly, Peter, you’re great at fresh arrabiata.”

One of the guests, Jennifer, takes exception. “Yeah, that’s all well and good, Tim. But I’ve seen the downside of free trade. My dad worked at Bethlehem Steel and was totally devastated when he lost his job in the 90s as the company was going bankrupt. He was in his 50s. He was never the same. All thanks to lower prices from foreign steel.”

Tim nods empathetically. “I’m sorry. That really sucks.”

“Thanks,” Jennifer replies.

“May I ask what you do for a living, Jennifer?”

“I have my own company buying digital ads for small businesses. I sometimes drive Uber on the side”.

“Do you love what you do?”

“I do actually. I feel like I’m designing my own life, warts and all.”

“And is your dad proud of you?”

“Definitely.”

“I bet he’d do anything for his daughter.”

“No question about it.”

“Neither of your jobs existed 10 years ago.”

“And in pre-internet 1990, Jennifer, they’d have sounded like utter nonsense. Yet if I told your dad that the same global competition that lead Bethlehem steel to go under was also essential to the development of new industries that would eventually employ his daughter…do you think he’d have sacrificed your future career for protection of his present job?”

Jennifer only needs one second to mull that over. “No. He’d do it all over again. He’d take a pay cut at a new job with a boss half his age so that he could put me through school. Because that’s what he did.”

David nods. “I’ve met Jen’s dad. He’s amazing.”

“Clearly,” Tim says. “Look, this stuff is hard because change is hard.”

“Trying to protect us from competition doesn’t make us safer or wealthier or happier.”

“And there’s no guarantee it saves the jobs people think they’re protecting, even as it eliminates countless others in the process. Work is an important source of purpose for all of us. But the real satisfaction of work comes from getting the job done. That’s the point. The job isn’t an end to itself, it’s a means to an end. We don’t live to work, right? We work to live.”

The whole table takes in that last idea. Peter steps in with dessert: “homemade cannoli anyone?”

As everyone’s leaving, Peter hands Tim his jacket. “Very interesting conversation, Tim. You gave me a lot to think about.”

Tim replies with a sly smile. “You got to hear me blather, and in return I got to enjoy your cooking. I’d say I won in that deal.” Peter grins and replies, “I’d say it was a mutual gain.”

David washes the dishes as Peter clears the table. “How about Jen’s dad? I didn’t realize what a hard time their family had. It’s easy to forget the human story when you’re obsessed with efficiency.” Peter agrees and adds: “Yeah. And I never considered all the unintended consequences from trying to protect certain jobs from competition.”

“…and done,” David says as he shuts off the sink and puts the last dish away.

Peter shoots back with a smirk: “Thanks, man. That’s one less job for me to do! Maybe we can finally agree on buying a dishwasher?”

David responds, “one step at a time, buddy.”

The post The Mutual Benefits of Free Trade Explained by an Austin Dinner Party appeared first on EconStories.

This year marks the 10th anniversary of the global financial crisis, the event which changed the course of our economy and inspired the creation of EconStories, starting with “Fear the Boom and Bust."

Ten years later, what caused the crisis, what should have been done to address it, and what should be done to prevent another one remain hotly contested questions, with Nobel Prize-winning economists coming down on every imaginable side. But one thing is clear, the financial crisis and the Great Recession that followed are two of the most impactful events of our lifetime. So I thought I’d reflect on the past 10 years a bit as we prepare for an exciting 2018 at EconStories.

I have no formal training in economics and, like most people, I didn’t have much of an incentive to learn about the subject until I started to grapple with the personal economic challenges of life. I graduated college in 1999 and began working at MTV that fall. Like any entry-level position in a competitive industry, I was working all hours of the day and night, barely making enough to afford rent, and struggling to get on my feet. Two years later, in early 2001, I lost my job when my division of MTV was eliminated in the wake of the collapse of the stock market, the bursting of the “dot com bubble”, and the recession that followed.

From the beginning, my working life was scarred by the boom and bust.

Fast forward to 2004, my wife Lisa and I bought our first apartment. This was my first real experience confronting the impact of interest rates and financial policy in a serious, personal way. We were both working at Nickelodeon as producers and we could just barely afford to qualify for a mortgage. But prices were rising fast and everyone we knew was encouraging us to secure a place before it became impossible. Two years later, at the peak of the real estate boom, prices had risen by more than 25% in our building and it became impossible to ignore that something bizarre was going on.

As the boom turned to bust in 2006 and every conversation shifted from frenzy to fear, I turned my daily commute into an ad-hoc economics education in the hope of understanding what the heck was going on. I read The Black Swan by Nassim Nicholas Taleb and was mesmerized by his insights about the outsized impact of rare events and our natural human struggle to comprehend probability. As I sought out more material from Taleb, I discovered a podcast called EconTalk, hosted by economist Russ Roberts. And down the rabbit hole I went. I’ve since listened to every episode of EconTalk, going back to 2006.

My hunger for economics understanding accelerated in 2007 and 2008 as the presidential election itself was consumed by the unfolding financial crisis. 2008 Republican candidate Ron Paul seemed to be the only one with a story about what was happening that made any sense to me. He, almost alone, was putting forward the “Austrian perspective” of the business cycle and urging people to explore the ideas of economists Ludwig von Mises and Friedrich Hayek.

What I Learned from the Austrians

In the Austrian view, money and credit played the central role in generating boom and bust, in part because money is the only good which runs through the entire economy, being half of every transaction.

Economic booms driven by an easy money policy from the central bank would inevitably plant the seeds of their undoing as inflation drove up prices and, eventually, interest rates, rendering large swaths of the economy unprofitable. In an Austrian boom, the underlying problems are the bad investment decisions made by businesses as a result of the unsustainable boom. Easy money also encouraged excessive debt, making the economy more fragile in the event of a downturn.

In contrast, the mainstream conversation among most politicians and commenters reflected the views of economist John Maynard Keynes. In this view, the cause of the boom was essentially irrelevant. The solution was all that mattered: borrow and spend even more! The Keynesian view was of course more popular with politicians who were anxious to direct increased government spending in ways that would benefit them. Keynes' logic was simple, but circular.

Keynes' logic was simple, but circular.

In the Keynesian view, businesses shrink and lay people off because they don’t have enough revenue to be profitable. His is a story focused on consumer spending and it’s compounded by fear and uncertainty, a waning of Keynes famed “animal spirits”. The simple solution is to increase spending in the economy as a whole, which in turn created more income for businesses, so that workers can spend more. This is the Keynesian “circular flow”. Spending begets more spending.

While I continued to find the Austrian perspective more persuasive, the political process didn’t. In early 2009, President Obama made his first major legislative priority the passage of the largest Keynesian “stimulus” plan in US history. Our solution to a debt-driven boom and bust was to borrow and spend at even more unprecedented levels.

What I came to understand was that Keynesianism wasn’t merely popular because it was well-suited to the desires of politicians. Every single introductory macroeconomics course teaches the Keynesian model. I didn’t realize this because I never had these classes in school. Moreover, popular news and media embeds this Keynesian status quo in all of it’s reporting. We’re inundated with the idea that consumer spending is the engine of the economy every three months, when quarterly GDP numbers are released. Rarely do economists or pundits explain the classical “law of markets”, which stipulates that before someone can consume they must first earn the money by producing something for someone else. As a result, Americans have at best a partial picture of our own economic system.

The Birth of EconStories

And so, in the early spring of 2009, I cold-called the host of EconTalk, Russ Roberts, and made a proposition.

I told him that I was a creative director at Spike TV, that I wanted to team up and put our combined skills to the task of offering an alternative approach to mainstream economics education. If I could learn economics from audiobooks, podcasts, and YouTube video lectures, I bet millions of other people could too! As someone working in the entertainment industry, I thought the best way to do it was through content that’s both educational AND entertaining. Russ and I began to brainstorm ideas for a project pitting Keynes against Hayek on equal footing in their debate over the boom and bust…and with the launch of our first Keynes vs. Hayek rap video on NPR’s All Things Considered in January of 2010, EconStories was born.

Since then, we’ve produced more rap videos, a holiday special, a web series that explores economics in the movies, a silly Star Wars parody of the sharing economy and other content. We’ve partnered with various non-profit organizations for support along the way, including The Mercatus Center at George Mason for the Keynes vs. Hayek videos, the Moving Picture Institute for EconPop and Artists4America on Share Wars.

In 2011, I teamed up with my wife Lisa and best friend Josh, both Viacom alums, to start a company devoted to producing content and creative projects like EconStories. Inspired by Hayek’s most essential idea, we called our company Emergent Order. Since then, EO as been the engine driving our EconStories projects. Our latest project is a series of animated shorts devoted to exploring the concept of emergence.

EconStories is a labor of love, and this year I want to give it more love than ever!

We’ve got a number of big ideas taking shape for 2018 and beyond. Having spent the past 7 years building our company, I’m excited to focus my energy on the fundamental economic ideas that started me on this journey a decade ago. This is my econ story, but I’ll be sharing many more in the weeks and months ahead.

The post I’m the co-creator of EconStories, and this is my econ story appeared first on EconStories.