By Kyra Ward
Economics & International Relations Student
Economics is known as the dismal science. A social science that is poor at predicting future trends, and notoriously tied with greed and consumerism. Economics isn’t the most popular of subjects. Even most economics majors will tell you that one of the only reasons they study economics is to get rich.
So, is economics really only a tool for greed? The Invisible Heart (2002) written by Russell Roberts endeavors to dispel these misconceptions and more. It is an important read for anyone, economics majors or not. This book brings up the morality of economics, the way economics is viewed in current society, and how even economists can feel love. While the writing is certainly not of the caliber of F. Scott Fitzgerald or even J.K. Rowling, and the plot is thin at best, The Invisible Heart does a great job as a fictitious book about economics. It holds the reader and leaves one with a greater appreciation for the dismal science.
The story’s two main characters are Sam Gordon and Laura Silver. Sam and Laura are both teachers at an elite private school in the United States. Laura is a new English teacher, whose ultimate desire is to become a lawyer. Sam is the economics teacher whose life’s passion is explaining the philosophy of economics. The first chapter introduces us to one of the oldest problems in economics: when will the world run out of x finite material (in this, case crude oil)?
From this, the reader also learns their first lesson about economics. No matter how much crude oil there is we will never truly run out, because as the supply becomes more scarce and the price rises exponentially, the demand will also fall because people won’t be able to afford the high prices. Therefore, the supply will never run out! Although a simplistic example, this first “problem” elucidates one of the fundamental tenets of economics, the relationship between supply and demand on the open market.
The Invisible Heart leaves one with a greater appreciation for the dismal science.
The next economic dilemma comes after Sam and Laura meet. Sam instantly falls for Laura, but finds himself only able to talk about economics when he’s around her. Sam is a classical economist, or an economic conservative, whereas Laura aligns more with liberal economic policies. For the sake of this book this means that she doesn’t understand much about economics and instead has very visceral and emotional reactions to economic policy rather than rational.
Given that Sam and Laura have very differing views on economics, and life in general, every conversation they have ends up being heated and argumentative, and while it’s great for us as the reader it makes Sam’s attempts at wooing Laura much more difficult. One particular conversation that stands out revolved around about giving money to the homeless. While there are many nuances to this argument, I find the most interesting to be the decision to give a homeless person food vs. money.
Laura’s logic is that it is much better to give a homeless person a V8 because it doesn’t incentivize their drug habit. Sam responds by pointing out that if the homeless person needed his “fix” he would do one of two things, either, he would sell the V8 to someone else for money to buy whatever poison he desired or he would consume it and then use the other money he made panhandling to get his fix.
In both scenario’s giving the homeless person the V8 doesn’t help them become less of a drug addict, so, you might as well give them money. He sums up this charitable dichotomy with the line, “you should try to help people on their terms, not your own.” This scene is matched with one at the end of the novel where Sam watches Laura give a homeless person some change, and when he teasingly asks whether she’s worried if he’s going to buy alcohol she responds by laughing and saying, “I kind of hope he does.”
This brings up an important economic belief, which is that the burden of decision making should always be the decision makers’ and nobody else’s’. To assume otherwise is to limit the freedom of the individual. It also shows that regardless of intention people will make decisions that maximize their own self-interest, so if a homeless person needs a drink more than he needs food then he’s going to find a drink.
The book examines another economic conflict which concerns the bottom line and corporate greed, which are two economic tropes frequently depicted in television and movies. It is told through a separate story line from Sam and Laura’s. It is about a company called HealthNet. When we are first introduced to this story it is as if it’s reality. However, at the end it is brought to light that it is a TV show, and Laura’s favorite at that.
In the show the greedy CEO shuts down an Ohio manufacturing plant in order to move it to Mexico, protecting the company’s “bottom line”. The entire show is the classic trope of the evil economist, which resonates in reality through the many stories of towns thrown into poverty when the factories that employ all the townsfolk have closed down. People pick up and move everything they have because they can no longer afford or live in the ghost towns that industry has left behind.
This is one of the most attacked and vilified issues in economics. Taking away people’s jobs is seen as downright evil. The argument that the fake TV show makes and that Laura has bought into, is that a company as large as HealthNet can afford to stay in the small town and pay a slightly higher salary to its workers. It is with this misunderstood notion of profit that I think one of the most important points is made in the book. Sam breaks the problem down into two main arguments: the reality of profits to a company and what happens to the towns when industry leaves.
The first point tackles the notion that a company moving overseas for profit is greedy. Sam makes several important clarifications here, the first dealing with the notion of profit and jobs. A company’s lifeblood is the profit that it makes, all the employees, investors, and shareholders are as reliant on a company’s profit as the CEO is. He points out that if a CEO is really taking more salary than a company thinks is right; the CEO will eventually be fired. Ultimately a CEO is the steward of a company and if he or she can’t produce profit he or she is unfit to be in charge. It is with this in mind that we need to go back to the original problem. Sam continues by explaining how even if Healthnet can survive the cut in profits, by keeping the manufacturing plant alive in Ohio, in the short term, ultimately, if its competitors take advantage of the decreased wages by moving overseas (which is in their interest) HealthNet will be unable to compete with the decreased prices and will still have to close the Ohio manufacturing plant and in the worst case scenario may go out of business altogether. This exact scenario is playing itself out right now in the United States and is what Donald Trump based most of his campaign on, the death of factories and manufacturing in the US has most people scared and jobless.
What is devastating is that, no matter who is president, the jobs aren’t coming back. This brings us to the second point that Sam makes which is that even though the loss of manufacturing jobs is horrible, and wreaks havoc on communities, it creates opportunity for the next generation. If you live in a town where your entire family works in a coal factory, it would be expected that you would also work in that coal factory, but if the coal factory doesn’t exist you have to find other options whether it’s a college education or moving to an area where there are jobs. In this way the closing of the coal factory opens the next generation to a world of possibilities that had always existed, but had never seemed possible before.
All of the economic problems that arise in The Invisible Heart are based in reality, and all the solutions that Sam provides are feasible as well. The trope of the greedy heartless CEO or economist is a tired and incorrect one, it would help society if we were to realize it. However, the book also recognizes that in a world where society needs a scapegoat for its problems; economics is an easy target. The book ends with Sam convincing Laura and the reader, that rather than a heartless science, economics just confronts the uncomfortable aspects of our society and shows them as they are. And that even an economist and an English teacher can fall in love, though that might be closer to fiction than fact.
3 Comments Add yours
I take issue with so many of these lessons it pains me. The idea that a resource can never run it is hilarious. I’m sure we can point to all manner of resources disappearing — ivory? Many species of fish? And those are renewable in the sense that they aren’t even ‘finite’ in supply.
Despite that — the theme you emphasize is that economics is about tradeoffs, which are not something society likes to acknowledge. That this deep discomfort with prioritizing is what really makes economics ‘dismal’ is an excellent conclusion.
Ivory ? Really there is a world wide movement built around protecting what is remaining which perfectly illustrates the point.
Fish are not a natural resource they are a species – different economic principals apply.
Your comment “a resource can never run”. Run what ?
Saying you doubt agree with Econ principals is like saying you don’t “like Jane Austen”. It’s an irrelevant statement / it’s the authors perogative to create a story around their beliefs. Refute the beliefs intelligently and then a conversation can be initiated.