Most people have zero interest in discussing the economy. There are three key reasons.
First, we don’t like things that are complicated. Politicians and experts create the impression that economics is extremely difficult to understand, and that’s enough to turn most people off.
Second, people aren’t interested in economics because it’s been used as a weapon to harm them.
Economic concepts and appeals to a special kind of “responsibility” have been used to justify political decisions which are downright cruel: targeting the vulnerable and destabilising families while providing massive cash windfalls to the wealthy. At the same time some voices have framed economics through the lens of scarcity, magnifying limits on resources and notions of hardship, rather than innovation and opportunity. This creates a distaste for economics, giving rise to such titles as, “the dismal science”.
The third reason that people are not interested in the economy is that they’ve been lied to.
By examining some of the most common lies about economics we can get a much clearer picture about what the field is really like and how the world around us works.
Lie #1: Economics is boring
Economic policy impacts everyone.
From what you get paid at work, your right to a refund at the shops, the price of visiting a doctor, or how challenging it is to find accommodation – economic policy has a massive influence on your daily life and holds the potential to reshape societies.
In the past century governments in developing nations have rearranged their economic rules and strategies leading to unprecedented growth. These changes have saved millions of lives through improved income, technology, and infrastructure, radically improving living standards and lifting entire communities out of poverty.
By contrast, one of the leading contributors to bankruptcy in the US continues to be medical expenses thanks to the most expensive healthcare system in the world. This too is the cause of economic policy.
When we consider what is at stake and the potential for life-changing benefit and harm, economics is anything but boring.
Lie #2: Economics is too complicated for you
Most of economics is common sense. We all have lived experience which provides us with a strong intuition about how the economy really works. We understand that goods for sale usually go to the highest bidder. We understand that rare items are more expensive than those that are common or generic. We understand that someone who doesn’t have a lot of employment options is likely to settle for a lower wage, we understand that if you buy a lot of something you’re in a good position to negotiate a discount, and we understand that marketplaces only work if everyone plays by the rules.
If you have any experience sharing, buying, selling, swapping, you’re smart enough to understand the economy. Some concepts, like bank runs and MMT, require a bit more explanation, but it’s not exactly quantum entanglement.
Lie #3: Economics is a science
The meaning of the word “science” has changed over time, but when people use it today they’re usually referring to the natural sciences such as physics, chemistry, and biology. This is what kids encounter as “science” in school and the association sticks.
Economics is a social science. Other disciplines in this group include psychology, anthropology, and sociology. There are similarities in the principles and methods that both natural and social sciences employ to build knowledge, but there is a world of difference in the type of knowledge that each field produces.
The biggest difference between natural science and social science is the quality of predictions that can be made. Since social sciences have a greater focus on people and less focus on inanimate matter there is greater room for variation and error when making predictions – whatever the odds, it’s always possible for humans to behave in unexpected ways.
The knowledge generated by social sciences like economics is invaluable. But it’s important to understand just how large a role assumptions have in developing economic models and theories. Newton's laws of motion are built on assumptions too, but since matter doesn’t change its mind or follow social trends we observe a lot less variation in the movement of rigid bodies than we do in the behaviour of economies.
Even when economists employ elaborate equations and formulae, remember that conclusions about the economy are only as good as their assumptions. And since societies are constantly changing we must regularly update our assumptions about how economies work.
Lie #4: There’s only one way to do economics
Economics is a highly political field. It concerns communities, families, government and the structure of society. People in power often seek to influence major economic decisions by pretending that their preferred way of viewing the economy is the only valid perspective.
This is perhaps best exemplified by British Prime Minister, Margaret Thatcher, who promoted her enduring brand of austere economics with the slogan, “There is no alternative”. She later attempted to underplay the role of states and communities assisting individuals in need through the unusual claim that, “There is no such thing as society”.
In reality, there are multiple contrasting schools of economic thought and it’s important to weigh their insights and arguments with reference to the specific problem at hand. Economists working on policy are meant to design rules and initiatives that will produce better outcomes for everyone. Different economic schools of thought bring a different approach to this job.
As any designer, engineer, or policymaker can tell you, design always involves tradeoffs. Economic policy design is the same. Whether it’s balancing the national budget, improving employment, or maximising the freedoms of investors, each school of economic thought has an underpinning philosophy and related set of objectives.
Economics gets a lot more interesting once you start asking the question: what really matters? Different economic schools will give you different answers.
Lie #5: The economy has always been this way
Tony Blair, another British Prime Minister, once said:
"My experience of change-making is that when you first propose a change people tell you it’s a disaster. When you’re making it, it’s absolute hell; and after you’ve made it, most people assume life was always like that."
We assume that life has always been the way it is now, more-or-less. The devil is in the detail. Just how different is life for you compared to life for your parents, grandparents, or great-grandparents? For decades in advanced nations, each succeeding generation enjoyed a better quality of life than the last. This trend is now broken.
Every element of the economic world that we take for granted was instituted by deliberate policy decision. That means the potential for us to redesign the world around is is enormous. On one hand that’s a scary thought – familiarity can feel safe and comfortable. One the other hand, for people struggling to keep a roof over their head, fighting for a fair go in their workplace, or being bullied by a faceless state agency it is vital to know that real change is possible.
Conclusion
Many people aren’t interested in the economy. This is a tragedy because economic policy has a massive impact on daily life. By taking a stance of disinterest we allow the discussions that concern the biggest social, moral, and health questions of our day to be dominated by others – usually those seeking to cement and expand their own power and wealth. There’s no conspiracy here; it’s just supply and demand.
Australians are in danger of falling for the lie that economic progress requires some people to get a raw deal. Changing that narrative requires action. We may have compulsory voting, but democracy is an opt-in game. If you don’t start paying attention to the basic facts of our economic world, if you don’t raise your voice to influence change, someone else will call the shots. And if the trend of the last forty years is anything to go by, that means a less equal nation where quality of life is deteriorating, not improving for young Australians.
Photo by Kristina Flour.