Quotes About Economics

And here's the rub. Humanity's journey through the twenty-first century will be led by the policymakers, entrepreneurs, teachers, journalists, community organisers, activists and voters who are being educated today. But these citizens of 2050 are being taught an economic mindset that is rooted in the textbooks of 1950, which in turn are rooted in the theories of 1850. Given the fast-changing nature of the twenty-first century, this is shaping up to be a disaster.

Gregory Mankiw's widely used contemporary textbook, Principles of Economics, the definition has become even more concise. 'Economics is the study of how society manages its scarce resources,' it declares—erasing the question of ends or goals from the page altogether.

What if we started economics not with its long-established theories but with humanity's long-term goals, and then sought out the economic thinking that would enable us to achieve them?

Though claiming to be value-free, conventional economic theory cannot escape the fact that value is embedded at its heart: it is wrapped up with the idea of utility, which is defined as a person's satisfaction or happiness gained from consuming a particular bundle of goods.

the idea of ever-growing output fits snugly with the widely used metaphor of progress being a movement forwards and upwards.

Such redistributive policies can be life-changing for those who benefit from them. But they still may not get to the root of economic inequalities because they focus on redistributing income, not the wealth that generates it. Tackling inequality at root calls for democratising the ownership of wealth, argues the historian and economist Gar Alperovitz, because 'political-economic systems are largely defined by the way property is owned and controlled'.

Aristotle who, recall from Chapter 1, distinguished economics, which he saw as the noble art of managing the household, from chrematistics, the pernicious art of accumulating wealth. 'Money was intended to be used in exchange but not to increase at interest,' he wrote in 350 BCE; '. . .of all modes of getting wealth this is the most unnatural.

There is a 'well-documented lifestyle effect', he notes, in which 'people outside the top 1 percent increasingly live beyond their means. Trickle-down economics may be a chimera, but trickle-down behaviourism is very real.

There is, however, a flip side to the market's power: it only values what is priced and only delivers to those who can pay.

In the words of Henry Wallich, governor of the US Federal Reserve in the 1970s, 'Growth is a substitute for equality of income. So long as there is growth there is hope, and that makes large income differentials tolerable.'70

Nudge policies, in essence, can be used to encourage us to mimic the way that we would behave if we were as rational as economic man.

If there is one task that merits the attention of the twenty-first-century economist, it is this: to come up with economic designs that would enable nations coming towards the end of their GDP growth to learn to thrive without it.

The Wealth of Nations.

Economic externalities are framed—thanks to their very name—as a peripheral concern in mainstream theory.

As economist Tim Jackson deftly put it, we are 'persuaded to spend money we don't have on things we don't need to make impressions that won't last on people we don't care about'.

Homo economicus may be the smallest unit of analysis in economic theory—equivalent to the atom in Newton's physics—but, just like an atom, his composition has profound consequences.

Jevons drew up 'calculating man', whose fixation on maximising his utility had him constantly weighing up the consumption satisfaction that he might derive from every possible combination of his options.7 With this move, Jevons placed utility at the heart of economic theory —a spot it occupies to this day—and from it he derived the law of diminishing returns: the more of a thing that you consume (be it bananas or shampoo), the less you will desire still more of it.

Over the course of two centuries—from the 1770s to the 1970s, as economic man's depiction morphed from a nuanced portrait to a crude cartoon—what had started as a model of man had turned into a model for man.

Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist.'19

Slavery was an issue, but the primary force for war was a clash between the economic interests of the North and the South. Even the issue of slavery itself was based on economics. It may have been a moral issue in the North where prosperity was derived from the machines of heavy industry, but in the agrarian South, where fields had to be tended by vast work forces of human labor, the issue was primarily a matter of economics.

This, of course, is a classic example of the failure of liberal economics. When evaluating a policy, it focuses only on one beneficial consequence for one group of people and ignores the multitude of harmful effects which befall all other groups.

The circular which was distributed to attract subscribers to the Bank's initial stock offering explained: "The Bank hath benefit of interest on all the moneys which it, the Bank, creates out of nothing.

When the fund was exhausted, the solvent banks were punished by being forced to pay for the deficits of the insolvent ones.

LAW: Long-term price stability is possible only when the money supply is based upon the gold (or silver) supply without government interference.