The Global Financial Crisis brought into sharp focus the fact that the economy has the ability to dramatically impact the lives of billions. And yet, despite the raft of heavily publicised economic data, the vast majority of people have no understanding of economics. This lack of understanding leaves them depending on social and business commentators to interpret the mysterious economic forces and signals, much as their ancestors relied on soothsayers, astrologists and witchdoctors.
But what do social and business commentators really know? And if they truly understand it, why don’t they get it right more often? And, more importantly, why don’t those in power do a better job of managing it?
The study of economics is a relatively new discipline, emerging from the time when modern medicine was teaching doctors to bleed patients as a curative measure. The word ‘economics’ has only been in use since the 18th century and to this day it is seen largely as the domain of the ‘experts’, usually economists and commentators. It seems that most people don’t understand economics because explanations by experts are convoluted and do not actually make sense. Understanding requires a fresh perspective, one that does not try to retain the ‘experts only’ mystique of economics, but one that empowers people to make better economic decisions.
The economy is the result of human endeavour. Everything humans do, or don’t do, has an economic impact. With billions of humans having a direct input into the world economy by making independent decisions and undertaking individual activities every day, the economy has trillions of data points. A major focus of professional and academic economists is attempting to simulate economic activities in an effort to predict future economic activity. As a result, much of the discussion of economics is to do with the relative merits of the various economic models used to create these simulations. By stepping back from economic modelling, measurement and simulation, we can get a much clearer understanding of economics.
This site outlines the underlying principles of economics and shows how to use these to understand the relationship between economics and major world events, it is an attempt to encourage people not usually interested in economics to know more about something that has a profound impact on their lives.