Every generation has a guru who comes along and proves that their understanding of money is far superior. We know this because they part us from ours, and then we gladly promote their ideas.

Just like in lessons from the Bible, where Joseph helped Pharoah see the wisdom of storing up grain in good years to prepare for the bad, Forbes has “9 Ways to Automate Your Savings.” There are not actually 9 ways discussed in the article. There’s 1 way: Have the funds automatically allotted. The other “ways” are just filler because if readers clicked the article and it only said put 10% of your income into a Roth IRA, they wouldn’t scroll past their advertisers. By stealing your time, Forbes is hoping to get your money.

It’s the same reason that books by David Bach, such as The Automatic Millionaire, and his hilariously bad Latte Factor, are not sold in the picture frame they belong in, but, instead, are 228 and 160 pages, respectively.

What the advice in the picture frame would say is:

Allot part of your income into a conservative, long-term, investment

Buy a home with payments low enough that you can still go out sometimes

Be wise about your purchases – small and large

Now it’s time to get into 3 examples of pop-economics from the 19th century to the present.

Coin’s Financial School

William Harvey was a brilliant lawyer who truly believed in many causes. While an attorney in West Virginia more than 90 years before the landmark Loving v. Virginia, he came to the defense of a white man charged with marrying a black woman.

In his fight, he demanded to know if anyone on the jury could prove his client wasn’t black – that he didn’t have at least 1 drop of black blood coursing through his veins. Harvey’s “one drop” demand was related to a rule that declared that having any black relatives allowed one to be declared black.

Harvey won the case.

2 decades later, in the midst of the worst depression the US had ever seen, Harvey adopted the nickname “Coin” and released, Coin’s Financial School.

Like many thin works of this sort, it included a fair number of illustrations, generous margins, and statements that make one feel like they are learning a lot about history, the world, and problems that face them.

Click here to see the book.

Among those who really grabbed onto Coin’s ideas were Populists in the west. According the Charles Curtis, a freshman Congressman from Kansas at the time, he became well-versed in this book so as to communicate with voters going into the 1894 election.

This was absolutely necessary because after the 1892 election, 5 of 8 Congressmen from Kansas were Populist, and the Populist candidate for President won 5 states: Kansas, Colorado, Nevada, Idaho and North Dakota, plus 1 Oregon elector.

The “Coin” book sold over 1,000,000 copies, partly fueled by the depression. During the 1896 election, the Democrats adopted Harvey’s stance, and it led to massive sweeping victories in the south and west, but Republican strongholds like New York and California helped William McKinley prevail.

In 1932, Charles Curtis was up against Harvey in another way. Curtis was Vice President under Herbert Hoover, and William Harvey was running for President under the banner of the Liberty Party. Harvey brought in over 53,000 votes. Certainly not enough to play spoiler to the absolute thrashing the Hoover/Curtis ticket took (losing even their home states of California and Kansas) but he was there at the beginning and the end.

Rich Dad, Poor Dad

Robert Kiyosaki was (and continues to be) a failed entrepreneur with a unique ability to write in a terrific style. His work is extremely readable, and if you want some good stories, I’d be lying if I turned you away from his books.

This led to his immense best-sellers in the “Rich Dad” series of books.

From 1997-2001, 5 were released, and many more after, including those by his “advisors,” a play off of one of the “Rich Dad lessons,” which was that rich people don’t really know things; they have people for that.

The fallout from all of the books was a general belief in a few things:

  1. That Robert Kiyosaki owned rental properties – lack of evidence says otherwise
  2. That Robert Kiyosaki was good at business – much evidence continues to say otherwise
  3. Experts are not that great, but they are also (somehow) worth paying extra
  4. A mentor is the best education

If Kiyosaki made his money in real estate, he could prove it. He cannot.

Kiyosaki failed in his first business – the manufacturing of the Velcro surfer and runner’s wallet – a terrific invention that he did not legally protect. While he was, per his own telling, driving a Porsche, he could not pay his bills.

Through the books, Kiyosaki made lots of claims about how experts really don’t know what a businessperson knows. He anecdotally denigrates various made-up lawyers, real estate agents, investment brokers, and professors while talking up little old ladies and (I’m not kidding) children who make millions in business deals. And then he also anecdotally overpays people of these same professions because he wants them on his team.

Mentors: It must be mentioned that Kiyosaki’s fake “Rich Dad” was a fantastic tool for people in MLMs. And it was in the MLM, AmWay, that Rich Dad, Poor Dad first took off. They loved the idea that a young boy stumbled his way into learning about money from a lone source with all the answers, and probably really thought it was just terrific that Kiyosaki came to find that it was “Rich Dad,” not his real dad, who had all the answers. Mind you, Kiyosaki’s real father was actually very successful. He raised up a family of 4 children, which included a Marine Corps helicopter pilot (Robert), oversaw a state educational program, and ran for lieutenant governor of Hawaii.

Even still, people listen to him. The man claimed bankruptcy 3 times from 1977-2012, and claims to be bankrupt right now. In fact, that’s his current lesson:

Get into so much debt it’s a bigger problem for them than you. Make yourself such a liability to those you said could trust you that they have to carry you across the finish line.

 

America: Who Stole the Dream?

This was a pop-economic miss due to real life proving it wrong too quickly.

As the 1996 presidential election was in full swing, fear over another Clinton/Gore term created opportunities to talk about what their economic policies would do to American citizens.

In this book, one can find such ideas that not only is asbestos rather benign, but occupational safety measures against it would be detrimental to jobs, in general. The main call to action was to get out of the way of big industry.

Like the “Coin” book, it was modestly educational, clarifying that budget cuts are not always cuts in spending, but cuts in how much spending is being raised. Reading this, one, including the author of this piece, feels kinda smart, and then goes around saying things like ‘they say they’re cutting spending, but they really mean they are cutting how much they raised it,’ without actually knowing if it’s true, but assuming the worst of the government because of the book they just read.

The popularity of this book’s ideas died in infancy when the top tax rate during the Clinton administration was raised from 28% to 39.6% and the economy just kept getting better. There’s more to the economic equation than this, and moves during the Clinton years led to many problems that persist, but that is beyond the scope of this article.

For more fun, you can read Time’s “top 25 people to blame” for the financial crisis of 2008. If you just want to see why it’s all Bill and Hillary’s fault right before the 2016 election, click here.

 

Freakonomics

For those who have not read the Freakonomics series of books, I recommend them. They are entertaining and interesting, co-written by a journalist and economist.

The main tenet of all of Freakonomics is that people are driven by incentives. While not totally untrue, the authors use this “hammer” and approach everything like a “nail.” An example can be found in a later work where one of the authors discussed how he used candy to encourage potty training, and how his child gamed the system by only peeing a little to repeatedly obtain the benefit.

 

 

Perhaps being so proud of being proven right in his worldview, the author did not adjust the incentive structure, but maybe also believed it would be futile to do so. He then segued from this to explain why green energy programs don’t work. Really.

But this is what the books are all about!

The series seeks to explore ideas that are seemingly unrelated, such as how real estate agents are like the KKK. For this, it’s all about information. When realtors cannot keep people from knowing about the market, and Klan leaders cannot stop the public from finding out things about them, due to the Internet, they lose all their power.

Regarding the KKK, the book discusses how a radio show had run out of global bad guys, like Hitler and Stalin. As a result, it focused on the Klan, but didn’t merely just say “Superman punched 50 Klansmen in their nut sacs,” which would have been great fun, or “Clark Kent converted to Judaism in preparation for a date with both of Roy Davis’ exes before taking them deep into PoundTown,” it noted current code words and other language exclusive to the Klan.

When Klan leaders found this out, they changed the code words, and then heard the new ones on the radio. This happened repeatedly, and it not only became embarrassing that the organization couldn’t maintain its secrecy (an essential benefit to many members) but that little kids were playing games like Superman vs. the Klan instead of a war game of US vs. Nazis, or cops vs. robbers.

The downfall of both realtors and the Klan is fairly evident in current society. For some info on this, see these articles:

 

A great example of the downfall of the KKK can be found in this very interesting interview on the channel “Soft White Underbelly.” The man being interviewed is a fairly new member who is not successful in his personal or professional life, but oversees a large part of the organization. This proves just how low the Klan has to scrape to fulfill necessary roles. In the past, very successful people were part of the Klan. This included, briefly, Harry Truman when running for judge. Historians have tried to change the story a bit – he just sat down for a meeting. Truth is, Truman did sign up. He quit when he was told he couldn’t hire certain kinds of people and later denounced the Klan, but the fact that he joined for even a minute shows the sway they once held.

Where Freakonomics should have less sway is in its note that President Warren G. Harding was sworn into the Klan in the Oval Office!

This is fucking asinine in how stupid it is. I’d ask for my language to be forgiven, but the word “asinine” in response to a scholar’s [lack of] work is much softer than saying Harding took an oath to these klowns in the Oval Office at the end of his life.

Let’s review some facts:

  • Harding’s 1920 platform was specifically anti-Klan, as seen in the Lynching section
  • His inner circle included the previously-noted Charles Curtis, a Native American Senator in a mixed-race marriage
  • He was believed by some to be black!

 

That last point is not a joke, and it will be discussed in a future article about the nomination of Warren G. Harding in 1920.

Back to Freakonomics: Using economics, it’s easy to think that everything is based on incentives. To Levitt and Dubner, they see the world this way. Incentives drive people, and they are not 100% wrong. But where this plays into the influence they had is that it tries to serve to explain all things.

When incentives are not the thing at play, the authors work to find a 1-thing-solved-it approach. For example, in their second book, SuperFreakonomics, they discussed New York City’s use of immediate arrests for small crimes in the 1990s, and how it saved the city.

I think it certainly played a role. After all, crime dropped more in New York than it did elsewhere, but it also did drop elsewhere. Why? Because what’s also happening during this period was that the economy was up and all the children born during the 1970s didn’t spend their lives breathing in leaded gas fumes. When leaded gas was completely banned in 1996, it led to increased IQs by as much as 7 points, meaning that people could think more clearly.

Shortly after, New York City banned smoking in bars.

The policing surely had some effect, and possibly much of it, but to say it alone did the job is to say it was the lone variable. It takes something as complicated as crime in the very many parts of New York City, and treats it like something as simple as solving the problems of a single household.

Perhaps the biggest influence these books had was not found at parties where someone suddenly thought, time to bring up abortion, or I better tell them that their car seat really isn’t going to save their baby, but in classrooms.

Because people, myself included, loved these books, some thought they harbored a secret passion for economics when they actually loved great stories about the world. As such, Steven Levitt noted that there are some students who come to his school, the University of Chicago, and find that economics is not about finding the secrets of the way people behave and convert them into wonderful tales so much as learning how to calculate things that then become charts and graphs. In some instances, these students belonged in his classes, but as a means of bolstering their passion in something like psychology, journalism or political science.

 

In conclusion, I say that if you can find a book you like, read it and share it. But if someone is telling you the secrets of the universe, it may be that they are not revealing new secrets about how it all works, but tapping into an old one of how to work us all over.