Once in a while a person stumbles on a treasure and when they do, it is right to stand back and admire the gift. I learned of Whatever Happened to Penny Candy?, by Richard Maybury (1989) in the comments section of Greg Mankiw’s blog.
It is a skinny little book with large print, written as a series of letters from “Uncle Eric” to a fabricated nephew. These letters lay out the basics of economics from the history of money, inflation, depression and a bunch of economic terms that will knock your socks off.
Written to suit a grade 9 reading level, this is one of those books you can breeze through in an hour or two and come away with a framework of reality so that when you read Greg Mankiw or the Captain, you can understand what in the Sam Hill they are saying. Consider this book the Cole’s Notes of life. Not only that, your intelligence quotient will jump 3 notches in a matter of minutes. Work smarter! Not harder!
Listen to this commentary on the auto industry:
By joining unions and going on strike, workers get higher wages. Then businesses must raise the prices of their goods o they can get the money to pay the higher wages.
The workers see the higher prices. They demand higher wages so they can pay the higher prices. Then the business managers must raise prices further to pay the higher wages.
For instance, the managers of Ford and Chrysler raise the prices of their cars. The workers cannot buy the higher priced cars so they demand higher wages. The managers must then raise the prices of the cars to pay the higher wages. Around and around they go, first a strike, then a price increase, then another strike, then another price increase, and so forth. Wages and prices spiral upward. The wage/price spiral sounds logical, but you must ask a question. Where did the money come from?
Chrysler can ask any price it wants for its cars, from 10 dollars to 10 million dollars. But it will only get the money if the money exists. Where did the money come from?
An auto worker can demand any salary, from 10 dollars per hour to 10 million dollars per hour. But he will only get the money if the money exists. Where did the money come from?
The answer, of course, is that someone printed it.
Yessirree. Someone might want to FedEx a copy to the White House.
Do you homeschool? Teach junior high Social Studies? Just want to sound smarter at parties? Whatever Happened To Penny Candy? is a gem and it is out of print so it could be said that it is a RARE gem. You’ll have to go hunting if you want it. The price will go up if there’s too much demand for it dontcha know.
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Oops! I lied about it being out of print. Mises seems to be selling it. Amazon has it second hand.