Economics LEARNED

When I first was introduced to the study and consequently, the world of Economics by Dr. John Kenneth Galbraith I asked myself the question, “What have I gotten myself into?”

Over fifty years later I find the study of Economics as interesting, personal and exciting as it was when the good Doctor said “We are going to learn about things that matter to you the most, from jobs and pay to political decisions and family security.”

Economics can be a fascinating subject. But what exactly is Economics? Ask ten different Economists and you will get ten different answers. “Economics is the study of those activities which, with or without money, involve exchange transactions among people.” It could be that “Economics is the study of men and women in their ordinary business of life, earning and enjoying a living.” Another might say, “Economics is the study of how mankind goes about the business of organizing its consumption and production activities.” I have heard it said that “Economics is the study of how men choose to use scarce or limited productive resources to produce various commodities and to distribute them to various members of society for their consumption.” All are good and adequate definitions. But my favorite is a lot shorter and a lot sweeter. Economics is the study of wealth and all that that implies. (and you can quote me on that)

To understand the “arena” of Economics you must accept that we (do you get some hint where I am going?) will be drawing heavily on the study of history. Why did the age of the steamship and railroad help the Iowa farmers but hurt the farmers of Vermont?

Mathematics and statistics are of special importance since Governments and businesses issue vast amounts of numerical information. Political science and government dictate an economic understanding if we are to ever understand legislation that continues to come spewing our way.

At times we will find ourselves dipping into the realms of sociology, psychology and even anthropology.

We are going to be focusing on the workings of the economy as a whole rather than in the viewpoint of anyone group or person. Social and national policies rather than individual policy are our goals. Too often, “everybody’s business is nobody’s business.” It is just as well, therefore, to clarify that I am not going to pretend to teach you how to run a bank or a business, how to spend money wisely, or how to get rich quick from the markets. But it is to be hoped that general economics will provide a useful background for many such activities.

Let me be very clear. This new section of IAAM does not replace anything else. This new section is simply called ECONOMICS LEARNED. Periodically we will be calling the class into session to weave our way through a labyrinth of economic fact, theory and myth.

John Maynard Keynes said it best at the end of his controversial classic “The General Theory of Employment, Interest and Money ,1936.

“The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else.”

So it was true in 1936 so it is true today. To be on a level playing field we should at least know what they are talking about.

So let the education begin. Lesson one: Things are often not what they seem. Fallacy of composition: a fallacy in which what is true of a part is, on that account alone, alleged to be also true of the whole.

Written by
With his passion for economics Bill Tatro has been entertaining audiences on the radio and in seminars for decades. Bill is an economist that provides weekly paid content to subscribers, and offers a free daily "lite" version as well.