Is Milton Friedman Smarter than a First Grader?

Capitalism is a giant pyramid scheme.

Professor Ian understands this, and is appropriately concerned for the well-being of society. Middle-man Daniel understands it as well, and couldn't be more pleased with the immediate yield of this economic sleight of hand.

All of these observations come from a little slice of creative play, but I think it sums up the larger macro-drama that we're all living out.

Daniel was handing Madeleine valentines out of his brown, ornate, hand-decorated valentines paper bag from the corresponding ritual at preschool, and instructing her to invest with them and reap the rewards, in a classically capitalistic virtual circle. He told her to take the "ticket" and go get some candy, and gave an overview of how this merchandise can be put to good use:

"Now that she has cards, she can get some candy, and the more cards she gets, the more candy she gets, and the more cards she gets, the more candy she gets, and the more cards she gets, the more candy she gets."

I was intrigued as to what process might be maintaining this circular motion, so I asked Daniel how she would get money, and he explained:

"Oh - she just trades the candy."

Ian wasn't participating up until this point, but now he had to volunteer a sobering perspective:

"And I'll bet that's one of the reasons why prices were getting so high."

Okay, I'll admit I'm a pinko, but I think they're both right. Daniel understands how the circle of endless profits progresses, and Ian understands where it all inevitably leads.

And all of this at such a young age, and summed up in a moment of frivolous play.

It makes me optimistic that neither of them will go wasting their time on Wall Street or at the University of Chicago...

(March 3, 2011)