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THE CAPITALIST CODE

It Can Save Your Life

(and Make You Very Rich!)

BEN STEIN

Humanix Books

The Capitalist Code

Copyright © 2017 by Ben Stein

All rights reserved

Humanix Books, P.O. Box 20989, West Palm Beach, FL 33416, USA

www.humanixbooks.com | info@humanixbooks.com

Library of Congress Control Number: 2017941400

No part of this book may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or by any other information storage and retrieval system, without written permission from the publisher.

Cover Photo: Getty Images Inc. Stock # 183078716

Cover Design: Paul McCarthy

Interior Design: Scribe Inc.

Humanix Books is a division of Humanix Publishing, LLC. Its trademark, consisting of the words Humanix is registered in the Patent and Trademark Office and in other countries.

Disclaimer: The information presented in this book is meant to be used for general resource purposes only; it is not intended as specific financial advice for any individual and should not substitute financial advice from a finance professional.

ISBN: 978-1-63006-084-8 (Hardcover)

ISBN: 978-1-63006-085-5 (E-book)

CONTENTS

Dedication

Acknowledgments

Chapter One: It’s Never Too Early for the Truth

Chapter Two: How I Learned to Stop Worrying and Love Capitalism

Chapter Three: The Pre-Dad Class

Chapter Four: A Glory of Life

Chapter Five: The Belly of the Capitalist Pig

Chapter Six: Conclusion

Final Note

Appendix A

Appendix B

Glossary

Further Reading

Index

About the Author

DEDICATION

For my Wife for Life, Alex

ACKNOWLEDGMENTS

For the ultimate guide, friend and mentor, Warren E. Buffett, for my frequent colleague and advisor, Phil DeMuth, and for my pals at Merrill Lynch, Kevin Hanley and Jerry Au.

CHAPTER ONE

IT’S NEVER TOO EARLY FOR THE TRUTH

Tis strange but true; for the truth is always strange; Stranger than fiction.

—Lord Byron

It’s time for some important truths in your lives. It’s never too early for the truth. But first, who am I to presume to tell you the truth?

Young Americans, you know me. In some ways, I am the most well-known teacher of economics in the world. It’s not because I know the most about economics. In point of fact, hardly anyone knows anything about economics. There are a jillion people on TV who will tell you they know about economics. Mr. Trump told us he knew about economics; Mrs. Clinton told us she knew about economics. But they didn’t—and almost no one can—predict the future of the United States economy with even a tiny bit of exactitude, if that is what is commonly understood to be the main ability of economists. No one ever could; the economy is fantastically complex. Trying to understand it is like trying to predict the weather or read the minds of the eight billion souls on this earth.

WHAT ECONOMISTS KNOW

I am a superfamous teacher of economics not because of any books or formulas I have written, although I have written many books about economics and finance, including some complex ones mostly authored by my genius friend Phil DeMuth. No, I am famous because Hollywood grabbed me up by the scruff of my neck, threw me around, shone lights on me, and rolled film on me. I played the boring economics teacher in one of the most magnificent movie comedies ever made, Ferris Bueller’s Day Off. I’m the one who asks, Bueller, Bueller? when taking attendance and who tells bored students about the Smoot-Hawley Tariff Act while they fall asleep at their desks and drool onto the Formica desktops.

In fact, I’m not an actor by education either, although I have been in hundreds of TV shows and movies. I am trained as an economist (and a lawyer). As I told you, this does not mean that I know with any precision the direction of the U.S. economy, why unemployment is high or low, or especially the direction of stock or commodity prices—neither does anyone else. No Democrat or Republican, man or woman, old or young, can tell the future. It’s a rare one who can even speak with the slightest truthfulness about the present. Economists are like psychiatrists; they have theories and ideas and data. But they can prove little.

Economics is about the allocation of scarce goods, chiefly the scarce good known as money. I want to assure you that economists know, in general, which moves make money and which don’t. They know, for example, that working is usually (but not always) a better path to prosperity than idleness. They know that trade protectionism sounds good but provides few benefits or none at all.

But that knowledge rarely makes them rich. A rich economist, at least one who has gotten rich from economics, is a rare bird indeed.

Neither myself nor economists as a group are experts in finding hidden gems among stocks. Alas, none of us can pick out the stocks that will be the next Apple or Facebook—no one can. At least, no one can for certain. The woods are filled with men and women who will take your money pretending they can pick stocks consistently. With only a few exceptions, they’re not leveling with you.

THE TRUTH ABOUT CAPITALISM IN THE UNITED STATES

But I can tell you some things of value. You are being sold a false bill of goods about money, about the world you live in, and about how to give yourself a bright future, money-wise. Let’s start with the obvious: When your professors and your schoolmates tell you that capitalism as we see it in the United States of America right now is an evil, exploitive system, they’re lying. When they tell you that you’re being consistently ripped off by Wall Street, they’re lying and they’re hurting you.

In fact, the system of democratic capitalism as now practiced in the U.S.A. is the best, brightest, most hopeful plan for organizing human economic activity that there has ever been. This is true both for you as an individual and for your whole generation. Capitalism is a great supermachine that can put in smart people and groups as ordinary students and workers and take them out as well-to-do happy campers.

Capitalism, if you play the game by the most sensible rules, is like having a neighborhood or dorm basketball