ECONOMICS, OR THE PROBLEMS OF Private (household management. The word "economics" is derived from the Greek oikos, "a house," and véμw," manage ") INCOME AND EXPENDITURE Public (political economy) Finance (management of the income and expenditure of the government) (Getting public income Royalties CHAPTER I WHAT MAKES A NATION PROSPEROUS Why the study of economics is important. Economics would have little interest for the serious student if it did not throw light upon the conditions of national prosperity and the methods of promoting it. National prosperity is generally understood to depend largely, if not mainly, upon business in its widest sense. The student is sometimes tempted, therefore, to begin the study of economics with an examination of the peculiarities of some of the large business establishments and business methods of the present day. These, however, are highly complex affairs, besides being the result of a long process of development from simpler beginnings. There is also a temptation to begin with a historical study of these simpler beginnings, but, because of lack of evidence, it is much harder to find out what business was like a few centuries ago than to find out what it is like today. The way to begin the study of economics is to analyze the business of getting a living and reduce it to its simplest elements. In this way we shall find what elements all business-large and small, primitive and modern-have in common before undertaking the study of the special peculiarities of different kinds of business. The primary purpose of the business man, as well as of all those who work with or for him, and others who work independently, is to increase his own prosperity. Under a properly organized industrial system, however, no one can increase his own prosperity except by some method that tends also to increase the prosperity of the whole nation. If there is a single case where this is not true (that is, if there is a case in which anyone can prosper by any method or practice that does not add or tend to add something to the prosperity of the whole country) there is an obvious defect in the laws or the organization of industry. This defect must be corrected if the nation. is to attain its highest prosperity. The more such defects there are, the less the nation can prosper; and the fewer there are, the more it can prosper. Before we are in a position to correct such defects or even to know whether they exist or not we must have a pretty clear understanding of the conditions of national prosperity and the things which promote or hinder it. Ways of getting wealth. The prosperity of a nation, like that of an individual, depends, in the most general sense, upon how many useful things and services it can manage to get. To have little and be satisfied with little may bring contentment, and contentment may be as desirable as riches or wealth, but it is not riches nor wealth. A peaceful nation may get those things that are called wealth (1) by finding and appropriating them, (2) by making or producing them, or (3) it may get them from other nations in peaceful and voluntary exchange, provided it can find or produce within its own borders things that can be given in exchange. How many useful things it may find within its own borders will depend partly upon how rich its land is in what are called natural resources-such as soil, minerals, forests, water power, grass, and a multitude of other things-and partly upon how active and intelligent its people are in searching for these things. How many useful things it can make will depend mainly upon how active, intelligent, and skillful its people are in all the arts of production and how thrifty and enterprising they are in designing, buying, and utilizing tools and other instruments of production. How many things it can get from other nations will depend primarily upon how many things it can find and produce to give in exchange, how favorably it is situated geographically for carrying on trade with other nations, and partly also upon how wise and enterprising its people are in learning the needs and desires of other nations and in adopting sound methods of carrying on international exchanges. |