After 70 years on this earth, I wish I could say that I not am surprised by the number of people, particularly those in government, that appear to have no understanding of economics. I’m not talking specifically about the various theories of economics like those of Adam Smith or of Marx and Engels or others. I am talking about basic economics such as bottom up free markets versus cronyism versus top down planned economics. Goodness knows we’ve seen more than enough examples of each throughout the past couple of millennia.
Free market economics such as those put forth by Smith have seemed to work pretty well, though like any system it isn’t perfect. We’ve seen the ‘socialist’ economics as outlined by Marx et al tried again and again and seen them fail...again and again. We’ve seen cronyism, often mislabeled “crony capitalism” even though it is an economic system in and of itself and can be seen as a parasitic entity in every economic system. (Yes, there is also “crony socialism”. Goodness knows we’ve seen it in a number of socialist and communist countries.)
But I am not specifically address those systems per se. Instead, I am addressing some of the street level economics that most people do not or will not understand. They don’t understand how the costs of everyday items is determined, what factors can affect costs and in their turn the prices everyone pays.
They don’t understand how taxes can affect an economy.
They don’t understand how regulations, be they economic or environmental, can affect prices across the board for the worst or the better.
They don’t know how prices are determined, how both demand and supply works and affects prices.
They don’t understand how government mandates can damage or cripple an economy, or how those who put those mandates in place don’t understand the effects of them either.
Too many people have no idea how money ‘works’, meaning they haven’t a clue about things like wealth or poverty. My biggest gripe is that so many people seem think the wealthy are just sitting on piles of cash stacked up in their basement, said cash just gathering dust. They don’t understand that cash is working by ways of investments – stocks and bonds – or venture capital to fund new businesses, and business loans or mortgages or auto loans and so on. They have no idea that diverting the working capital to fund someone’s dream government program can have a negative effect on the economy if it goes too far. (We passed that point a few generations ago which is why the US is $44 trillion in debt.)
None of this is a diatribe to say how gawdawful our economic system is. It’s about people’s absolute ignorance about how thing actually work and because of that ignorance they’re willing to believe the silliest and most unworkable economic theories even with all of the historical evidence of what works and what doesn’t.
Seeing what we’re hearing during the run up to mid-term elections in November has me worried to too many of the electorate will buy the ignorant BS put forward by one party as a solution to all of our problems despite hundreds of years of historical data showing they don’t really understand economics.
