Profits without honor: part III

Posted: Dec 26, 2003 12:00 AM

In a hugely complex world, there is no way for the average person -- or any person, for that matter -- to be knowledgeable about even half the things that affect their lives. Most of us are necessarily ignorant of many fields, from botany to brain surgery.
We can simply avoid discussing such things and we would not dream of working in those fields or advising those who do. But people who know nothing about economics often voice opinions on the subject nevertheless.

 Misconceptions about profits are just one symptom of this lack of understanding of economics. Some people even think that policies based on their uninformed notions should be imposed by the government. But no one would dream of imposing uninformed policies on those engaged in botany or brain surgery.

 However, we cannot opt out of economic issues. Every citizen and every official they elect has an affect on the economy. Our only options are to be informed or uninformed when making our choices in the economy or in the voting booth.

 Unfortunately, those who are uninformed -- or, worse yet misinformed -- when it comes to economics include the intelligentsia, even when they have Ph.D.s in other fields.

 Economics as a profession has some responsibility for this widespread lack of understanding. Highly sophisticated economic analysis can be found in courses on campuses where a majority of the students have no real understanding of something as elementary as supply and demand.

 Even students taking introductory economics as their one and only course in the subject may get little that they can take with them out into the world as citizens and voters. Introductory economics is too often taught as if the students in it were all potential economists who had to be introduced to the standard graphs, equations and jargon that they will need in higher level courses or in the profession.

 With all the time that is devoted to equipping these students with tools that they will never use again, some may leave an introductory economics course with little more understanding of real world economic issues than they would have had if they had never taken the course.

 People who took economics years ago often write to me to say that they learned more from reading my book "Basic Economics" than they ever learned from taking a course -- or courses -- in the subject when they were students. Yet there is nothing in this book that any economist could not have told them.

 The problem is that there are no real incentives for academic economists to write a book that simply explains economic issues in plain English and without the usual paraphernalia of the profession. The last book that did so was written by a non-academic economist half a century ago: "Economics in One Lesson" by Henry Hazlitt, who wrote a popular column for a living.

 It was -- and is -- a fine book. The fact that it is still in print after 50 years, despite being small and outdated, shows not only its merits but also how little the other economists have written that can compete with it.

 Incentives have a lot to do with this lack of competition. It will certainly not do an academic economist's career any good to write a book saying what every other economist already knows. Your colleagues might even wonder what was wrong with you.

 Moreover, it is hard to throw off the habits of a lifetime and write a book on economics without a single graph, equation, or use of familiar jargon. I know. At one time, I doubted that it could be done.

(Note: This is part two of three. Part one is here. Part two is here

Nevertheless, from time to time, as some ridiculous economic idea was proclaimed in the media or in politics, I would sit down and write something to explain what was wrong with that way of thinking. Over the years these fragmentary writings accumulated in my computer until -- after about a decade -- I realized that there was enough material to organize into a book.

 That book became "Basic Economics." Its second edition has just been published and it has also been translated into Japanese, Korean, and Polish, and is currently being translated into Swedish, so apparently people find it worth reading. Maybe there will be some more informed voters in the future.