Economics has been called "the dismal science."  Anyone who has formally studied it understands why.  Therefore, I am going to address its exciting, thrilling, and fun aspects.  Just kidding.

Economics is what you do every day.  You make decisions.  How to spend your time, your money and your efforts all depends on how you practice your economics.  Most of this is a no-brainer.  It does not take a genius to understand that the more you spend on this, the less you can spend on that.  Therefore, you have to balance your priorities.

Politics is all about getting people to do things that you want them to do.  Whether by force, deception, or persuasion, our political leaders get us to support them and to oppose their rivals.  We all do this.  Some people do it on a grand scale.

War has been called that form of politics that relies entirely on force.  If "diplomacy is war by other means," the reverse is just as true.  The purpose of war is to impose one's will on the enemy.  Its method is to remove an enemy's ability or willingness to resist.  Whether by death or by surrender, one side or the other will eventually cease to resist.

The reason we have politics and wars is that people do not understand economics.  For centuries, most political leaders thought that gold is wealth.  At first, that seems reasonable.  Wealthy people have gold.  With it, they can buy stuff.  The problem is, one cannot eat gold.

In the 1700s, a revolutionary book was published, the short title of which is The Wealth of Nations, by Adam Smith.  It explained, perhaps for the first time in an informative, persuasive way, that wealth consists of goods and services, not money.

The basic idea is so simple that we find it difficult to believe that some people strongly disagree, but they do.  The concept is that in order for people to have "stuff," somebody has to make it.  Small children need never concern themselves about where food comes from, because it just "appears" on the dinner table for them to eat.  In a large, urban society, many people never outgrow this magical, mystical mindset.  Food just appears in the grocery store, and money just appears in the form of government checks or EBT cards.  Even people who work hard for a living, although they may have an appreciation of the necessity of producing things, fail to understand the other vital factor: distribution.

To understand distribution, one must be able to understand another of Adam Smith's principles, which is this: just as you demand to be paid for your work, so also do the producers of what you consume.  Stated a different way, producers do not make stuff for you out of the goodness of their hearts.  They demand a profit.  Stated in a darker way, producers are greedy.  If you cannot pay, they will not produce.  They would let you starve.

From here on out, it gets more complicated, and it does so because politicians make empty promises to people who do not understand basic economics.  They promise to make food magically appear on your table, or at least in your grocery store.  When food supplies run short, they blame the "greedy" producers.  Vote for me.

Their solution is to "tax the rich" — that is, to take away some of the incentive to produce.  The tax money is supposed to be used for the good of society.  That would be a good idea, except that politicians don't know when to quit.  They think tax dollars magically appear, and that there is an endless supply of them.  Eventually, they kill the goose that lays the golden egg.

This leads to war.

All nations need wealth, even if it is only food and water.  The thing is, those who rule their societies do not do so out of the goodness of their hearts.  Politics is brutally competitive.  It becomes even more competitive when the rival is a foreign country.  When that foreign country bases its economic system on making food magically appear (communism, socialism, and other forms of authoritarianism), it needs what you have.

World War 2 began when the Axis powers could not produce enough goods and services for themselves, and so they decided to invade Ethiopia, China, and Poland for starters.

World War 3 now looms because Russia and China know full well (thanks to computerized projections) that their dreams of socialist utopia are inevitably going to collapse into desperate poverty and popular rebellion.  The rulers will lose their power and, most likely, their lives.  The West finds itself similarly distressed, as socialism is gaining an ever stronger foothold in the formerly capitalist nations.

It will happen suddenly.  Accountants will secretly inform their leaders that, without a dramatic, abrupt inflow of foreign wealth, their society will collapse.  No one needs to tell those leaders what needs to be done.

It will be thrilling and exciting, but definitely not fun.

Image: Bill Selak via Flickr, CC BY-ND 2.0.