How Economies Work - Explained In 10 Minutes
Last year, I met Norb Svanascini, a Chicago area businessman and a pilot. Norb came to America as an immigrant from Argentina at the age of seven and has owned and run a wide variety of businesses in the Chicago area over his long and successful career. I went for dinner with Norb after we had concluded our business. I look forward to such occasions for their rich buffet of fascinating stories and intelligent conversation.
During the dinner, he said that he had a 10-minute explanation of how economies work. I wondered how he could tackle this complex subject in so short a time. He said that as a young man he loved flying both model and real airplanes. In the course of becoming a pilot he had to learn the forces acting upon a plane in flight. At the same time, he was enamored with the economy and how it worked. It came to him that there were strong parallels between the forces acting on an airplane and an economy. He proceeded to draw the following diagram on the paper place-mat on the restaurant table.
Then he elaborated on the terms he used in the visual metaphor he sketched as above.
- In an airplane, gravity is the fundamental force an airplane fights against.
- In an economy, it is the acts of God, things you cannot control, i.e. weather, death, sickness, that are the fundamental forces dragging it down.
- In an airplane, the fundamental active element is the thrust of the engine
- In an economy, it is the work of Business and Industry that is the driver-its thrust
- In an airplane, the drag created by the air is another force that slows down the flight.
- In an economy, it is the things we can control but impose on the economy--taxes and regulations that drag the economy down.
Norb was being excessively modest--I clocked his explanation of the flight of the economy at under 3 minutes--and most of that time was spent in sketching the diagram--which said it all. I guess long time businessmen who actually fly the plane of a business in an economy can understand what is going on more clearly than economic pundits who are merely the spectators on the ground (but often pretend to remotely control the plane and end up simply adding to the drag).
Editor's note: This article is part of a series featuring the stories of immigrants based on interviews by ILW.COM team member Shrikant Rangnekar.
- In an airplane, lift results when the thrust exceeds the gravity and the drag, and the airplane rises in the air.
- In an economy, lift or economic growth results when the efforts of business and industry exceed the gravity of natural decay and the drag of political encumbrance.
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