If you do a Google search on anything regarding economics, traditionally, two things will result. The first is some sort of wikipedia page for the economic topic you searched or relevant research journals from databases and universities. These two resources are fantastic in the information they provide. However, even the wikipedia-type pages write to level that very few people will be able to follow. I’ve studied economics for years and still have a lot of difficulty trying to learn new concepts from a journal entry. The simple truth is that these articles and entries are written for different people. They aren’t for teaching or learning or discussion, no matter how well intentioned, because the assumption of knowledge of the reader is very high.
This results mainly because of what I have observed as a large division between groups of people in the world of economics. Imagine an old English castle with a moat surrounding it. On the inside of that castle are the “hardcore” economics with PhDs and sophisticated titles that huddle together to discuss their field of science. On the outside, trying to pass the challenge posed by the mot, is everyone else. That gap is what creates things that drive me up the wall when well-intentioned people try to talk about economics. This is nothing against very smart economists. They have taken huge amounts of time and effort to build theories that give the rest of us a way to understand the world around us.
Trust me on this, though. To get the amount of knowledge required to be able to read an economic journal competently is very difficult. But that shouldn’t be your goal. I am here because the intuitive basis of economics is actually quite simple. It creates a perspective that, at the very least, broadens your ability to approach a given circumstance or problem differently. I am here because there seem to be few sources that will try and take the time to explain basic economic theory to readers simply trying to understand what’s being discussed in the Wall Street Journal.
I’ll give you the example that really spurred me to start this blog. Given the latest administration in the White House and the concerns over governmental budget deficits, a lot of discussion has been taking place over potential tax increases. (Eventually, of course, those tax increases were approved by the Obama administration and are set to see their implementation beginning in 2011.) One economic concept that gets discussed continuously along with tax increases/decreases is the theory outlined by the former member of the Economic Policy Advisory Board for the Reagan administration Arthur Laffer. During the beginnings of that administration, Laffer famously outlined a curve on a cocktail napkin to help explain the basics of his theory, the theory which latter became known as the Laffer Curve. This simplified idea is that under some circumstances, a government could raise taxes yet receive less in tax revenue.
For obvious reasons then the study of this curve is very critical in the setting of tax rates. Sure enough, publications like the Wall Street Journal spend time writing about the Laffer Curve but do little to actually explain the derivation. Conversely, often times, these writers are way off the mark with their analysis. This diagram attempting such explanation typifies why I am writing now:
(Sorry, easy spot for a break. Click on to continue to reading.)
You see, the derivation of the Laffer Curve is not based in statistics. Sure, it comes as no surprise that such a relationship would show a similar representation to the Laffer Curve but this diagram in no way derives a Laffer Curve. Don’t worry at the moment how the curve is derived (I will surely create a post at some point describing the basics of the curve’s derivation), just understand that it becomes difficult to understand economics if the sources you are trying to learn it from can’t derive the theory themselves.
As such, you see plenty of people, including, it turns out, my own mother, who consider economics more of a “voodoo” science. When most people’s understand of economics is very limited and based upon incorrect explanations, it is very difficult for the theories to be viewed as credible by the public. Economics is becoming a “good in theory, bad in reality” sort of concept. This is not because the science of economics is incorrect. (In some cases, sure, it may be. But for the vast majority of cases, economics is very much correct and present among us everyday) This results because most have not be able to find a source of learning of the basic concepts.
This site then is aimed to provide a platform for discussion and learning about the economics that we use everyday in the real world. This isn’t an online textbook or some dry diatribe on purely technical terms. This site is about creating a setting to see and discuss the economics that we see on a continual basis. As such let me say these two things:
Who is this site NOT for?
Yes, I’m actually starting with someone likely other than you. This site is not for “hardcore” economists with PhDs or even Masters degrees looking to expound their greatness among the mere laypeople of the internet. I am not taking the time here to create an absolutely perfect and pristine textbook of economic knowledge and as such there will be mistakes and opinions that many will disagree with. But that’s the point. This is a center of discussion and it’s hard to have an honest discussion if everyone is concerned about the Harvard Professor coming down on them for stating something incorrect. I certainly welcome the discussion and opinion of everyone but want to make it clear that I am not spending hours out of my day writing these posts because I am the infallible leader. I am writing these posts to help bridge the moat that divides most from understanding the basic economics they want to use everyday. As such, if you are looking for a platform to spread thesis ideas or find ways to solve ridiculously complex mathematical expressions, you will walk away from this site disappointed.
Who is this site for?
It may already be clear by now, but this site is here for those of you are aren’t trying to earn their PhD but are trying to learn and discuss concepts of economics that are present everyday, in the real world. My assumption is that everyone who is reading my posts have absolutely no basis of economic knowledge. That is, when I say something like “cross-price elasticity of demand”, I expect to need to derive what that concept refers to. This site can not take you to “infinity and beyond” when it comes this science, but I hope that the site can provide a resource that helps enlighten simple ideas that you can use in the real world. Like I said a little bit ago, economics is not a “voodoo” concept. Take a look at the title: The Economics of the Real World. You may not know it now but every decision you make has an economic thought attached to it. It is present in the real world. This site will be for those of you are looking to begin to learn just a little bit of what economics is all about.
This site also isn”t just for me. I’m not writing this with the goal of profiting exorbitantly from it. I’m also not writing this because I want to project my greatness out to everyone. This site, then, is for every reader as well. I, therefore, encourage everyone to post a comment and be a part of the discussion. Challenge me, question me. When I teach and tutor students in economics classes, believe it or not, I am capable of getting things wrong. Thus, if I write something that you want to understand but simply can’t, it may be because I have made an error. It may also be that you have a misunderstanding about a past or present concept that is keeping from grasping the point. Make a comment, answer other’s comments and questions so that this site can provide respectable ways of addressing those questions and comments.
So who am I? Well, I am not the owner of a crisp new PhD nor a Masters degree. I did graduate university with a BS in Economics and have taught and tutored introductory economics like this for a number of semesters now. That means that even if you wanted to learn enough to grab a PhD I simply can’t take you there. And again, it also means that I am fallible. But my goal, as stated, is not to create topics and discussion of such a drastically advanced nature. The intuition of economics, which is what you will experience every day, can be relatively simple to understand. It’s also, surprise surprise, interesting and fun to discuss and argue about. This is what I enjoy teaching and that is why I am here writing now.
One last note, do be a little bit patient. This is not a news blog that simply regurgitates information from another source. I will take time to make sure that the things I write are as good as I can make them. It means that posts will come in 30-a-day bunches. I will try and get them out as quickly as possible, but understand that it is better for you and I if I spend the time making something right as opposed to rushing things out and confusing you and me.
