Tuesday, May 12, 2009

How can we approach economics?

Economics can appear to be an esoteric area of study for those unfamiliar with it. It can even be intimidating, or boring. Yet the news is rife with reports on the state of the economy. We are told that we have a "bad" economy, or that "our economy is fundamentally sound". What do these statements really mean? How do we begin to understand such platitudes?

Henry Hazlitt outlines his approach to economics in his book, Economics in One Lesson:

"...the whole of economics can be reduced to a single lesson, and that lesson can be reduced to a single sentence. The art of economics consists in looking not merely at the immediate but the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups." (17)

If we are to be "good" economists, then, we should strive to see as many consequences of actions or policies on as many groups as possible. We would be "bad" economists to the extent in which we fail to envision the consequences of our actions on all groups. This idea is elegant in its simplicity and carries a greater power to explain our world than one might initially think.

I'd like to highlight that Hazlitt characterizes economics as an art. It is a method of thinking more than an exact science. To many in modern academia this is a critical mistake, but his "one lesson" is successfully applied to many areas of life. Oftentimes when we apply this method of thinking we learn that what we intuitively assumed to be truth is revealed to be fantasy. This is where economics ceases to be boring and becomes fascinating - it provides a methodology that illuminates our minds and explains our world, solving many problems that have plagued humanity for thousands of years. Economics is another area where we generally find ourselves looking into Ozymandias' mirror.

1 comment:

  1. I like the definition of economics there, I think that the problems with the economy are really symptomatic of the problems with society and they trace to the fact that no one really understands causality, this results in an entire society composed of " the Bur", Ain Bur Yireh Cheit, one who does not recognize causality does not fear error....