Foreword

Given one set of ideas, a man may starve himself to death or throw himself before a speeding train. Given other ideas, he may work from dawn to dusk for a pittance.

For man is a creature of ideas. “As he thinketh in his heart, so is he.” What he does today depends on what he thought yesterday. What he may do tomorrow depends on what he thinks now and will think then. Soldiers fight the wars that make headlines, but back of the men of force are thinkers and talkers who tell them whom to fight and when.

Truth, therefore, is as necessary to human life as food and drink. Wrong ideas may be as deadly as any poison or virus. Right ideas mean health and progress.

Most Americans know this. They know that right thinking is essential for the good life they want their children to have. So they try to educate them in truth and right. They build temples of learning, hire much-schooled teachers, spend freely on “wholesome” entertainments, endow colleges, attend meetings, serve as trustees, scold their children, support alumni organizations—and hope!

It is with this costly effort in mind that I have written this booklet. I think I have something important to tell those who spend so much time and money on education about what they are getting for their many sacrifices.

In addition, every businessman and investor, every wage earner and salaried worker—in fact, everyone who plans for the future—will succeed or fail in his economic endeavors according as he knows what his fellow citizens may think and do in the future. What teachers tell their students is going to help determine future property values and tax rates, employment and wage levels, prices and interest rates, controls and subsidies.

And should not every educator or scientist, no matter what his field, be concerned about what his colleagues are doing? Will not the success of his own life’s work depend much on the help he gets in discovering and disseminating truth in other fields?

In the following pages I try to show as simply as I can how the most popular writers of economics textbooks now treat the problems of government spending, taxes, and money. I give their arguments for higher taxes on the well-to-do, subsidies to non-producers, more government borrowing, and the inconvertible money that makes it all possible. I point out similarities between their theory and that of Karl Marx, the messiah of Communism. I try to show where the theory leads in the realm of private morals and personal conduct, as well as in government and politics; and I give reasons for thinking that it is reactionary and false.

In striving for brevity and clarity, however, I necessarily sacrifice much. I do not give a comprehensive survey of economics textbooks or of all the teachings of any textbook. My survey even of the one school of thought is only partial and incomplete. I cannot in this brief study give all the ramifications and criticisms of a theory that its advocates set forth in many volumes.

However, I do not think it necessary to pursue in all its details a theory that starts from wrong premises and ends with unworkable conclusions. The basic fallacies of it, I believe, are not hard to understand, and the menace of its conclusions is daily becoming more evident. If this is so, it is important that these elements of understanding be made readily available.

In my opinion, the new point of view, which its proponents call the “New Economics,” or the “Keynesian Revolution,” has done great harm to students whom I have seen fall victim to it.

Even now, I believe, it is destroying the foundations of our nation.

V. ORVAL WATTS

Altadena, California
January, 1952