Friday, October 30, 2015

Economics and education

"Most of us have long lamented the general public's lack of understanding of economics", writes Chris Dillow - before linking to a study suggesting that it is the under-development of the average human brain that lies at the core of the problem. This is exacerbated by politicians who have a vested interest in reinforcing misconceptions, such as the the notion that a nation's finances are like a household budget. I really like Chris's writing but this isn't very helpful. If you want to assume people don't get economics because they aren't able, go ahead - but I'd suggest the reason is more straightforward: they don't get it because nobody bothers to explain it to them properly. Two points here:

 1) It isn't taught in schools very widely. In Scotland it is possible to do it as a certificate subject but not only is it not compulsory, hardly any schools do it at all. I'm not sure what the situation is in England except to say that I do know it doesn't form part of the core curriculum either. Given that this is unlikely to change, not least because there isn't really anyone demanding things be otherwise, any economics education would have to come from somewhere else. Chris probably rightly rules out politicians and the MSM here, which leaves only 'public economists'. But there's a significant problem here...

 2) 'Public economists' are a rather other-worldy bunch who really need to learn the humility of a good teacher. The bad teacher assumes that the reason the class hasn't followed what he or she is saying is because they're just plain stupid. Well, they may well be - but the good teacher at least allows for the possibility that perhaps the reason the class hasn't grasped the curriculum is because it hasn't been explained to them very well.  How many public economists are good teachers in this sense?  I'd suggest not many.  There are quite a few who I won't name but are the sort of people who spend an inordinate amount of time on social media complaining, or crowing, about how unbelievably thick people who disagree with them are.

Take, for example, the idea that the government's finances are like a household budget.  This is obviously wrong.  "When I find money is tight, I just print some more".  You can't because you don't have a currency-issuing central bank in your living room.  But economists, like good teachers, should use bad analogies, work with them - and then explain why they are wrong later when understanding has developed, rather than dismissing those who use them as thickos.  Why, for example, are there so few economists (are there any?) pointing out that many of those who claim to be "living within their means" have debt in the form of mortgages that are often easily in excess of two and a half times their annual income?  And why is there no 'anti-austerity' politician making the point that when Britain emerged from the Second World War with a national debt roughly around this proportion, the government built the NHS from the ground?  Why is there no-one to say that what this present government is effectively saying is that, "Sorry kids but Christmas is cancelled this year because we're making it a priority to pay off the mortgage earlier than we have to."?

More generally, why are there absolutely no anti-austerity politicians in the British Isles, even among those who say they are?  Corbyn isn't against austerity - he just want different people to do it.  The SNP aren't either.  They actually practice austerity in the form of budget under-spends while complaining that it's the rest of the UK that should be doing the more elastic fiscal policy.  The failure is pretty comprehensive and I blame the teachers - or rather the economists that should be teachers but have for whatever reasons failed in their responsibility.


Simon Fawthrop said...

" Why is there no-one to say that what this present government is effectively saying is that, "Sorry kids but Christmas is cancelled this year because we're making it a priority to pay off the mortgage earlier than we have to."?"

You've fallen in to the debt Vs deficit error. If we're using the household analogy we're not trying to pay off the mortgage, we're trying to stop the overdraft increasing month on month.

If we must use the household analogy I'd prefer to say its more like refusing to increase the mortgage to invest in, say, fixing the roof or your own training when its really cheap to do so and will reap greater benefits later.

Shuggy said...

No, I know the difference - although that one is probably better. There's never one that quite fits, which is part of the point but if they insist on using them...

Mike said...

I fear that neoliberal capitalism has not only captured politics and the media but also economics as an academic subject. If economics courses were more widely available, you may well find that the economics taught is wrong. The BBC could run a series of documentaries busting economics myths but "the need for balance" would also require the other, false, view to be featured.

Living near a proposed HS2 station, I taught myself the basics of HS2, by objectively analysing the facts. It will worsen the north-south divide, worsen rail services for the majority of rail users, not address congestion and not add any useful capacity. Yet politicians at all levels, from local councillors to the prime minister, are shouting the opposite. And I have no chance of making myself heard, even locally. Following the Lords' inquiry into HS2, their lordships reached the right conclusions, amazingly. Because they did not do the necessary homework and the academic witnesses, rather than being independent, were very careful not to upset the industry funding for their own projects.

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