Friday, March 13, 2009

Economics 101

When I was a first-semester junior in college, way back in 1960, I enrolled in a course in basic economics.

A couple of weeks into the semester my professor made what was to me at the time an astonishing statement.

“Economics,” he said, “is not about right or wrong. Economics is about how to make a country rich.”

I’ve forgotten what prompted him to make this statement. But it made a lasting impression on me, troubling my naive young mind particularly because of the way he said it—leaning with an almost covetous leer on that operative word, “rich.” It was that, I’m sure, which fixed the entire statement in my memory for all the years since.

In any case, I was not interested in how to make a country rich, and, as I found the course material tedious anyway (and the 8 a.m. meeting hour inconvenient if not downright uncivilized), I persuaded the dean, despite his concerns that I may be falling short of my potential, to let me drop basic economics.

Now, in 2009, I’m really glad I went no further than I did in the formal study of economics. I’m glad I never understood the stock market or any of the sophisticated mumbo-jumbo passing for innovative banking and bookkeeping which has since imploded on us like the collapsing Twin Towers. I’m glad that I never borrowed any money in my own name or qualified for a credit card or invested in securities or bought property or life insurance or even made enough some years to file an income tax return at all. I’m glad I participated in the economy so little that until I was old enough to receive Social Security benefits I barely made enough from my labors to maintain a decent car.

Because if I had known better—which is to say, known what my economics professor wanted me to know—I might have participated more in the economy, believing that I could make myself rich. And I would have found out, as so many others who thought they were playing it smart have discovered, that my sophisticated knowledge of economics had created an illusion of wealth which was, in reality, staggering debt.

What seemed to be going up for so many decades was really going down. And then the clouds parted, and the reality showed itself, and the richest country in the world turned out to be a country that had gambled away its inheritance like a decadent prince.

It seems that economics is about right and wrong after all. And to manipulate an economic system to achieve spectacular rewards, enriching oneself and one’s associates—one’s cronies—with no regard for how that behavior impacts society or the planetary environment, is wrong. We see now how it backfires. In the end it destroys wealth. No one gets rich. Everyone suffers, including the perpetrators. It is a formula for eventual economic collapse.

It’s too bad they weren’t teaching that when I was in college. Then maybe our business departments wouldn’t have graduated a generation of economists, bankers, and various other wheeler-dealers whose main concern has been to grow the bottom line, no matter who it hurts.

For a long time, it hurt the poor in third-world countries the most. But beginning in the 1970s it began increasingly to hurt our own American middle class. Now, it seems, it’s hurting everyone, even those who formerly grew rich at the expense of the great majority of us.

Our current situation certainly suggests that we need a radical change in our understanding of what economics is supposed to do. But what sort of change should it be?

This is the question of the century, and it’s a thorny one because the principle that has long governed our understanding and built our institutions—that economics is about how to generate wealth—is in tatters. It’s worn out. It doesn’t work for anyone any more.

That message hasn’t reached Washington yet. It certainly hasn’t reached Wall Street. But that may not matter, since the politicians and the financiers are the ones who created the mess, using economic savvy that turns out to have been foolish at best, if not downright wicked.

I think we need a shot of spirituality to inform our economic understanding. We need to internalize the reality that the material world, where we seek to build and inhabit fiefdoms and empires, is a bus terminal, not a destination. We arrive and we depart, many of us in very short order. In reality, we own nothing, we have nothing. Not even our precious bodies are keepers.

Obviously, then, material wealth is an illusion. That is the spiritual view, substantiated by the simple reminder of our mortality. Religious or philosophical belief hardly enters into it. The only excuse for making the pursuit of wealth a priority in this mortal dimension is an ignorance which denies our true condition.

We are drifters who are just passing through. All we really need is enough change for a sandwich and a cup of coffee.

And since that is the case, it seems to me that economics should provide knowledgeability for the most practical ways to negotiate among ourselves in three basic areas: birth, sustainability, and death.

And it should do this without losing sight of the fundamental fact that the setting for its operations is a bus terminal.

That means that, rather than reeling all over the place like an adolescent tripping on acid in an amusement park, economics should focus on the reality of our physical impermanence. It is, after all, a social science. It’s scope should be society-wide, pondering how to grease the wheels so all of us travelers arrive smoothly, experience reasonable comfort during our temporary lay-overs, and depart in courteous, timely fashion.

Its central question should be, What is the best way to facilitate the distribution of resources—of goods and services—to all travelers in a temporary world where no one, whether man or mountain, will stay for very long?

Until economics addresses that question, I see no point in taking the course. Basket-weaving would be more useful.


At 7:54 PM , Blogger Imaginista said...

The altar of consumerism at which most Americans have worshipped has crumbled. The up side to having our conventional way of life crash around our ears is that many people, for the first time in their lives, are learning what really matters. They're embracing simplicity, honoring people over things; frugality is in vogue. More of this, please.

Great piece - well said. Thanks.


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