Economics for the rest of us

Is economics worth studying?

I believe that it helps us understand the follies of a society.

In a lecture, I did say that a good economist should be able to explain such things as tall fences in poor countries and no fences in rich, the attractiveness of a Robin Hood figure in a society of rich and poor (or powerful and powerless), why graft and corruption exist, how potholes in the streets will get fixed, why airline food tastes bad, the “despotic” manners of teachers and security guards, how monogamy became the rule on marriage contracts, or how movie stars and world-class athletes get to enjoy high incomes.  That is quite a long list of things to explain!  But the most important thing to explain is perhaps why a country is poor or rich.

But how do you explain the value of studying economics to a poor person whose resources are so limited that he barely subsists?

The hard answer is that you can’t.  If you could you just might get him to understand that he is poor partly because the rich and powerful don’t listen to the economists who say that poverty is a result of bad institutions that for the most part reflect the acts (of commission and omission) of the rich and powerful.  In that sense, economics invites a healthy discontent, but since the poor are not likely to “get it,” it is up to the thinking “rest of us” to do what we can.

And sometimes all we can do is laugh or cry.

This post was inspired by this cartoon:

Economics confused
Economics confused

3 thoughts on “Economics for the rest of us

  1. Yes, when it comes to what economists call public goods, as well as to certain types of private goods where the market fails (natural monopolies, commmons goods). For these goods, we need institutions other than the market to solve the “economic problem” (what to produce, who will do so, how to produce, and who will consume, etc.). Institutions are the product of a social contract, more or less, where the rich usually have a greater say. And growth economists now concede that institutions are the key element in reducing poverty. For more please see my post on how to define institutions.


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